Weekly Resin Report: Higher Price Cycle Now Underway

As the end of the second quarter drew near, completed volumes were better than year-ago levels but fell short of our first-quarter average, reports the PlasticsExchange in its Market Update. Both polyethylene (PE) and polypropylene (PP) prices were firm and the bottom end of both of those markets continued to lift. The flow of fresh railcars slowed as producers seek to raise prices in July; some PE and PP grades have become outright scarce.

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Processors were again searching for very well-priced resin, but by the end of the week, most seemed to recognize that the stellar opportunities available just a few weeks ago were now history and a new higher price cycle was underway.

June PE contracts have increased $0.04/lb, and producers are riding the upward momentum, having nominated another $0.05/lb increase for July. PP contracts seem to be rolling flat again in June, although a small cost-push increase could be justified — at the very least, recently rising monomer costs should translate to a moderate July increase. While demand in some sectors like automotive has slackened, other areas have shined including medical, single-use bags, and resin exports in general. The overall domestic processing community is still ramping back up.

Spot PE trading and pricing was solid this past week, though demand somewhat stalled as spot prices snugged up to reflect the $0.04/lb increase being implemented for June contracts, writes the PlasticsExchange. Buyers were still looking for resin at old pricing, but availability continued to tighten and few special deals were to be found. Certain grades were difficult to source without jumping the price several cents: These included low-density PE for film and injection, linear-low-density PE granular, as well as high-density PE for film and blow molding. Most producers were essentially sold out for the remainder of the month, as they turned their attention toward July and their next $0.05/lb increase. In the meantime, the middle market has provided good liquidity as savvy resellers added to inventories over the past couple of months at historically cheap levels. Their spec buying is starting to pay off, writes the PlasticsExchange. Export demand remained strong and buyers have become acclimated to higher price levels, which are starting to inch up again.

PP trading was good last week, but not great. Completed volumes at the PlasticsExchange trading desk fell short of the previous week’s tally and prices ended flat, but with an upward bias as the bottom of the market cleaned up further. Prime truckload availability was adequate to fill most urgent requests, but premiums were sought and generally received. Reseller inventories now seem to be thinning out. Generic prime railcar offers were limited, though there was a steady flow of good off-grade material, but those prices have been rising. Compounders continued to seek lower-end wide-spec railcars at low-ball pricing, but there has been a growing trend for these cars to be sold into the export market, according to the PlasticsExchange, which has seen volumes grow in recent months.

Braskem announced completion of the construction of its new billion-pound PP plant in LaPorte, TX. It is the first new PP plant built in the United States in almost 20 years and will begin production of a full slate of homo-polymer, co-polymer and Random co-polymers later in the third quarter. PP contracts should be steady to up a cent in June; rising monomer costs currently point to a three- to four-cent increase for July. The PlasticsExchange added that it remains “somewhat bullish” on PP pricing for the short and mid term.

Read the full Market Update on the PlasticsExchange website.

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