Spot pricing had a mixed week with a firm undertone, reports the PlasticsExchange in its Market Update. Polypropylene (PP) finished the week of May 17 up a cent and polyethylene (PE) levels were mostly higher, with some steady. Just one grade lost ground.

Though resin reactors generally have been running smoothly, most producers remain under force majeure with contract allocations still in place. The supply of fresh PE and PP railcars was again predominately off grade. Very little domestic prime was available for the spot market, though some prime liquidity was provided through forecasted orders and imported resin. Incremental PE exports were challenged by price, but Latin America and Europe emerged as notable outlets. PP exports were limited to off-grade resins, as prime is needed for contracts.

PE sales hampered by limited availability

While PE demand remained fairly robust last week, spot sales were limited by the lack of availability. Hefty production figures suggest that upstream inventories are improving, yet railcars of most Prime grades remained absent in the secondary market. These grades include linear-low-density (LLD) PE Hexene, high-density (HD) PE Pail Grade and 20 melt, LLDPE high flow for injection, and low-density (LD) PE high clarity for film. Supplies of HDPE for blow molding have been coming and going quickly, aided by imports, adds the PlasticsExchange. High molecular weight for film remains the only loose PE resin, as availability has grown, hampered by weak exports. Including the May nickel, producers have implemented price increases in each of the last six months. PE contracts have already soared $0.33/lb in 2021 and a total of $0.57/lb since June 2020. Several producers have nominated another increase for June.

PP prices edge up a penny

PP trading was solid, with overall demand and buyer interest remaining strong, although the number of companies clamoring for spot material has diminished. Renewed PP production has been satisfying a larger percentage of contract orders, soaking up fresh Prime material, while a steady flow of off-grade material pelted the spot market. Still, with contracts poised to jump double digits, spot PP prices edged another cent higher and are again within striking distance of record levels. Completed PP deals at the PlasticsExchange were slanted toward homo-polymer, as co-polymer remained super scarce. Co-polymer PP typically trades at $0.02/lb over homo-polymer PP, notes the PlasticsExchange, but the spread has expanded to a dime. 

To supplement insufficient availability of domestic PP, imports from Asia and the Middle East continued to arrive and feed demand for prime spot material. Buyers sought more material to import from overseas but were disappointed by high ocean freight prices and long lead times.

Heading into next week, the chance of possible tropical development in the US Gulf has weakened, but the threat of flooding from the storm system along the coast may still be an issue for logistics. Hurricane season officially begins on June 1, and any moderate to severe hurricanes would send prices for the already tight PE and PP markets higher.

Read the full Market Update, including reports on oil and gas activity and the monomer markets, on the PlasticsExchange website.