The month of May was merry, indeed, at the PlasticsExchange, which reported that it was among the most active trading months it has ever seen. Nevertheless, limited availability and firm pricing remained the prevailing theme for the polypropylene (PP) and polyethylene (PE) markets heading into the Memorial Day weekend, the resin clearinghouse writes in its weekly Market Update.
Most producers remain under force majeure or have contract allocations in place, sending many buyers to the spot market to procure material. Procrastinators have been unable to out wait the market to procure material amid rising prices. Significantly elevated freight costs and shipping delays also pose challenges.
While PP and PE production and inventories are improving, most material has been soaked up by contracts, yielding limited spot material, while reseller inventories also remain sparse. The beginning of hurricane season is upon us and the ongoing resin supply/demand imbalance suggests that any significant disruption to production could send prices even higher.
Prices steady in spot PE trading
Spot PE trading volume was nicely above average, reports the PlasticsExchange, noting that prices were mostly steady with a firm undertone. High-density (HD), low-density (LD), and linear-low-density (LLD) PE injection grade offers came and went very quickly. A little bit of prime blow molding appeared and was immediately snatched up. LLDPE Butene was a bit more available, while Hexene and Octene remained elusive. LDPE film grades were still snugly supplied and rotomolding material was nowhere to be found. The PlasticsExchange said that it procured additional large import deals for HDPE blow molding resins, including HIC, Dairy, and for large tanks. May PE contracts concluded with a $0.05/lb increase and there is as much as $0.07/lb nominated for June. PE contracts have increased by $0.57/lb since last June.
PP market inches back toward record pricing levels
The PP market continued to climb back toward record levels — the low end of the pricing spectrum cleaned up further while the top side edged a penny higher. Spot co-polymer (Co) PP maintained its dime premium over homo-polymer (Ho) PP. Trading was active: Big movers were domestic off-grade HoPP and imported prime CoPP. The overall market can be considered very tightly supplied.
PP contracts followed PGP higher in May, both increasing $0.13/lb. Producers backed off of their nickel margin increase efforts in May and instead will seek to implement a $0.08/lb margin increase in addition to the rise in June PGP contracts. After the mid-February storm, spot PP prices quickly rallied to the $1.50/lb level, establishing a huge premium to contract prices. Spot then eased just a tad, but generally bopped around the elevated level ever since. After a series of increases, whether monomer or margin related, PP contracts have been closing that gap.
Read the full Market Update, including reports on oil and gas activity and the monomer markets, on the PlasticsExchange website.