After a dry spell, spot resin trading improved last week, reports the PlasticsExchange (Chicago) in its Market Update. Demand showed signs of life while material offers showed signs of slowing. Commodity polyethylene (PE) and polypropylene (PP) prices were flat to a penny lower as the market remained under the spell of special holiday discounts.
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PE buyers are hoping for further relief in December, with some seeking a repeat of the $0.03/lb November decrease. PP buyers will reap the benefit of eroding monomer costs, as contract resin prices are poised to settle about $0.08/lb lower; it’s been a sharp and swift two-month correction, writes the PlasticsExchange. PE exports continue to grow as part of producers’ plans to sell off supplies from new production, which is already on-stream; plenty more is still coming online. Some great spot resin offers are still available, but the PlasticsExchange expects availability to begin to dry up as the end of the year approaches.
The spot PE market finally picked up midway through December, with prices steady to a penny lower, depending on product. The flow of offers remained heavy, although it tapered off toward the end of the week. Trading volumes increased, reaching average levels, as buyers took advantage of the very competitive supply environment amid ever decreasing material costs. Resin prices have been on a special discount and some buyers, knowing that holiday sales do not last forever, began to procure larger sized orders preparing for January needs. So, after a period of weakness, negative market sentiment is starting to wane a tad. Even so, many are still calling for further contract price declines, hoping that December contracts match the $0.03/lb decrease that peeled off in November. At least one producer has nominated a $0.03/lb and $0.05/lb increase for December and January, respectively, in an apparent attempt to at least maintain current levels, as fundamentals don’t seem to support an increase. International interest continues to pour in, as traders exploit the loose PE supply situation in North America.
Spot PP trading was about average. There was a steady supply of fresh railcars, both prime and off grade, while supplies of packaged material dwindled. Spot PP prices eased another cent; December PGP contracts began to settle $0.08/lb lower, bringing some clarity to the PP contract market, which should follow, according to the PlasticsExchange. Demand was unenthusiastic, due to the combination of PGP erosion pulling down PP prices along with processor de-stocking efforts. However, buyers did probe the spot market seeking relative deals and some were clearly disappointed that suppliers still demanded a pretty penny to fill urgent requirements.
Looking ahead, the PlasticsExchange anticipates demand returning as the sharp readjustment in contract prices will compel buyers to begin to restock as they peer into their early 2019 processing needs.
Read the full Market Update on the PlasticsExchange website.