Weekly Resin Report: Historically Low Resin Prices Fail to Ignite Sales

It was a challenging week for spot resin trading, reports the PlasticsExchange in its Market Update. The flow of resin requests diminished and those opportunities that did arise were still difficult to complete. Resellers continued to de-stock, generally limiting purchases to when they had back-to-back sales. Spot commodity resin prices slid further, as buyers were scarce and supplies accumulated.

Spot polyethylene (PE) levels were steady to down two cents as off-grade and generously downgraded/near-prime material developed an even larger discount to contracts, which have been holding firm ever since the pandemic developed.

Polypropylene (PP) prices gave up a cent. Recovering monomer costs will negate much of the previously expected April contract decrease. Most participants recognize that these historically cheap resin prices will create an excellent opportunity to stock up, but also that there is probably still time as resin prices continue to slide. Exports remained strong — producers are doing their best to ship surplus materials away from the domestic market. Resin production rates are expected finally to decline in April, according to the PlasticsExchange.

The spot PE market hit the brakes last week. Activity was limited, even as prices moved lower. Volumes fell well below average at the PlasticsExchange trading desk as the global pandemic caught up to demand. April had been plugging along with an initial surge of buying to support consumer stocking of groceries and other items to last them weeks and even months, but other non-essential businesses have been temporarily shut for several weeks and the slowdown has worked through the supply chain.

Spot PE prices were steady to down two cents this past week, as products like low-density film and linear-low-density PE injection lost some of the premiums that had been built from previously tight supplies. There is a growing call from processors for a contract price decrease in April, but the success and magnitude remain unknown at this time, writes the PlasticsExchange. Several producers purged very large volumes of their inventory to help lighten the burdensome overhang that developed from still strong production and slower worldwide demand. Much of the material dumped will reportedly head to China, which has already restarted parts of its economy, while other countries largely stay shut as they deal with the COVID-19 pandemic. The exported resin might not necessarily be processed now, as it seems that groups in China have been exploiting the situation to acquire and stockpile a variety of commodities at fire-sale prices.

Spot PP trading was slower, availability was better, but not ideal, and prices gave back the previous week’s penny gain. PP buyers were a bit more active than PE customers and there were deals to complete; however, most availability was for fresh railcars as resellers’ on-hand truckload inventories have dwindled. Continuing a trend, buyers were generally seeking more conservative truckload quantities amid the uncertainty. Of the limited deals completed, volume favored co-polymer over homo-polymer PP, and railcars still sold more than truckloads. The PlasticsExchange expects truckload availability to improve in the coming weeks, as recently purchased railcars hit packaging lines. PGP monomer costs have recovered, so the anticipated April decrease will likely be small.

Read the full Market Update on the PlasticsExchange website.