Weekly resin report: Historically low resin prices ring in new year

Weekly resin report: Historically low resin prices ring in new year

Most commodity resin prices fell sharply during 2019, but the variance among grades also highlighted distinct differences in sub-markets. High-density polyethylene resins eroded $0.12 to 0.14/lb over the course of the year, while low-density film only shed a single cent.

The new year began with historically low resin prices, reports the PlasticsExchange (Chicago) in its weekly Market Update, and only two days into 2020, all grades regained 0.01/lb, setting off what could an exciting year ahead.

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Most commodity resin prices fell sharply during 2019, but the variance among grades also highlighted distinct differences in sub-markets. High-density polyethylene (PE) resins, including film, blow mold and injection materials, each eroded $0.12 to 0.14/lb over the course of the year; film and injection linear-low-density PE dropped a solid 9 cents; while low-density PE for injection lost a nickel and snugly supplied low-density film only shed a single cent. The vast majority of new PE production was sold into the export market, which continuously rocketed into record monthly volumes.

New propane dehydrogenation (PDH) units came on stream, sending PGP costs lower and downstream homo- and co-polymer PP resins down a hefty $0.15/lb; 2020 will finally bring some new PP production into the fold.

After a very busy December, the PE market just drifted into year-end and then started 2020 with a bang. Spot activity always seems to return after a holiday break and it was a pleasure to see so much pent up demand, writes the PlasticsExchange, which reported completing transactions in most commodity grades, some in quite high volumes.

A serious run emerged on low-density PE for film and linear-low-density PE for injection, both of which had already been scarce. Demand is typically strong in January and prices usually start higher, much in contrast to a generally dismal December with its seasonal supply dump. Spot PE prices lifted a penny across the board, as the new year rang in, just as bullish market forces became more prevalent. It remains to be seen if the PE market can build upward momentum in the face of another round of new production, which is forthcoming. In the meantime, the level of price opacity has increased—major indices held up much stronger than the spot market did in 2019 and producers are not necessarily agreeing with index assessments, according to the PlasticsExchange. In fact, some still contend a price increase was warranted in December, and asking prices have begun 2020 several cents higher. It is still very early, but a price increase for January could be viable, writes the PlasticsExchange.

PP trading chilled at the end of the year and began to ramp back up just as the calendar turned to 2020. There were some well-priced railcars that hung over from December and were simply snatched up by buyers; other processors required truckloads for quick shipment as their inventories dwindled into year-end.

PP prices followed PGP costs $0.06/lb lower during the fourth quarter and off-grade prices trimmed even more, bringing spot resin down to historically compelling levels. Considering the uncertainty in the Middle East and new highs in crude oil prices, which could trickle into resin, some processors have started to rebuild their inventories, citing low-cost opportunity vs. potential upside risk. By the end of last week, PP prices had climbed a penny, which was barely a dent compared to the $0.15/lb wiped away during 2019. There is new PP production slated to come online during 2020, but the PlasticsExchange said that it is still mildly bullish from this low level.

Read the full Market Update on the PlasticsExchange website.

TAGS: Materials
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