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Weekly Resin Report: Domestic Prime Resin in Scarce Supply

Image: Peshkov/Adobe Stock weekly resin report stock image
There are still no signs indicating that resin prices have peaked. Indeed, producers are poised to raise prices in July on the heels of a June increase.

Most spot polyethylene (PE) and polypropylene (PP) prices held steady for a second consecutive week. Although buyers were wishing and hoping to talk the market down, there was still no real sign that US commodity resin prices were headed for a reversal, reports the PlasticsExchange in its Market Update.

Some market participants pointed to the return to healthy reactor rates and corresponding build in some upstream resin inventories, but domestically produced prime resin was still very difficult to source in the spot market, as force majeure conditions and sales allocations remain in place for many producers. There was some resistance to market pricing early in the week of June 14, but buyers that truly needed material were unable to find a better deal and came back later in the week to pay suppliers’ asking prices. Producers showed their intent on maintaining the firm undertone that has been the prevailing theme throughout this year by announcing another round of PE price increases for July. The July nominations came as June contracts have yet to be finalized but lean heavily toward implementation. 

Spot PE demand remained robust and, once again, completed orders at the PlasticsExchange were limited by scarce resin availability. Despite stronger production rates, contract orders are filled first, leaving scant supplies for spot sales. One producer indicated they were already sold out for the next two months. Completed orders were spread out with low-density (LD) and linear-low-density (LLD) PE Film, and high-density (HD) PE Blow Mold business accounting for 81% of the PlasticsExchange total PE business for the week. The other main commodity grades — HDPE Film, LDPE Injection, and LLDPE Injection — saw moderate flow, accounting for the 19% balance of the resin clearinghouse’s PE trading. All prime PE grades were transacting over $1.00/lb, except HDPE high-molecular-weight Film, which has been firming back higher again. HDPE Blow Mold still held the largest premium because of its scarcity and the impracticality of importing bottles, which is mostly just shipping air. PE demand from Mexico was just as strong as it was the week before. Producers likely will secure their average $0.05/lb increase for June PE contracts; in the meantime, at least three producers have announced their intention to increase prices again in July. Producers nominated price increases for June within a $0.05 to $0.07/lb range, driven by solid demand and limited supply. 

Dow raises PE resin prices

Dow said it will increase the price for all PE resins sold in the United States by $0.05/lb for July, or as contracts allow. The company added that it was implementing its previously announced price increase of $0.07/lb for all HDPE resins and $0.05/lb for all LLDPE and LDPE resins sold in the United States, effective June 1.

LyondellBasell said its Equistar Chemicals business is increasing prices for all grades of PE products sold in North America by $0.05/lb, effective July 1. This is in addition to any previously announced price increases, including a $0.07/lb price increase implemented on June 1.

Meanwhile, Ineos announced a price increase of $0.03/lb for HDPE, effective July 1. The Ineos July increase was in addition to its previously announced price increase of $0.05/lb, effective June 1.

June PE contracts are expected to settle toward the end of the month. Buyer reaction to the nominated July increases has been thin, writes the PlasticsExchange, but there is growing market sentiment that June will see an increase.

LyondellBasell declares force majeure

The July price announcements also come with many producers still under force majeure or with contract allocations in place. LyondellBasell is the latest producer to declare force majeure, doing so on June 17 for LLDPE at its La Porte, Texas, facility following a Q1 reactor equipment failure. The notice comes after the company lifted its force majeure on all PE compounds in April, according to market participants. La Porte was already on force majeure for other PE products. LyondellBasell lifted force majeure on all products, except at its Chocolate Bayou, Matagorda, and La Porte facilities. LyondellBasell did not give a timeline for how long the force majeure would be in place but said it was evaluating the impact on production and logistics, and it would provide additional information once it assesses supply capabilities.

Producers push for $0.08/lb PP resin increase

As for PP trading, completed volumes were solid and, like PE, still limited by prompt availability. Homo- and co-polymer prices held on to their gains for another week, remaining in the vicinity of all-time highs. Co-polymer still commanded its $0.10/lb premium to homo-polymer, which has been intact since mid-May, reports the PlasticsExchange. Co-polymer was also the most actively traded grade at the PlasticsExchange last week. Domestic supply is limited, so most of the material was sourced from Asia and to a lesser extent the Middle East.

PP contracts will confirm higher again in June, with producers pushing for an $0.08/lb margin increase in addition to a rise in the June PGP contract. Perhaps we will see a total of $0.10 to $0.12/lb implemented, writes the PlasticsExchange. "We might expect producers to push for the lion’s share of the increase to be slanted toward margin, which is more sustainable than the cost-push PGP induced increase, some of which could potentially erode next month unless July monomer strengthens."

Read the full Market Update on the PlasticsExchange website.

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