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Weekly resin report: Improving supply prompts willingness to make deals

Weekly resin report: Improving supply prompts willingness to make deals
As a better flow of fresh railcar offers came to the market last week, resellers were more willing to make deals and sell off uncommitted materials. 

The month ended with a bang, as activity spiked on the spot resin markets the last week of March, reports the PlasticsExchange (Chicago) in its Market Update. The supply situation seems to be improving—a better flow of fresh railcar offers came to the market and some accumulated. Resellers were more willing to make deals, as they sought to sell off uncommitted materials. Demand kept pace, with buyers eager to procure resins that had been scarcely available. While off-grade prices for both polyethylene (PE) and polypropylene (PP) were weaker, as were Generic Prime offers out of Houston, domestic prime prices mostly stayed steady, aside for some slight softness in high-density PE. 

Cool Design
Image courtesy Cool Design/

Good volumes of PE were transacted across the major commodity grades, according to the PlasticsExchange. Some relief buying occurred, as March contracts largely rolled flat. Producers are likely to give the $0.03/lb increase another go in April. Spot prices were mostly steady this week—high-density PE was a tinge weaker, while prime low-density PE film grades, which remain tough to source in large volumes, showed renewed signs of strength. Sensing a decline in prices could be ahead, resellers have been unloading inventory and opting for back-to-back transactions. Although producer-direct PE exports continue to ship at a rapid rate, traditional exporters still comment about the lack of competitive offers. As such, some larger exporters, which traditionally source from the United States, have been supplying their international customers, particularly in Asia and the Middle East. 

PP trading was above average. Good volumes have been transacting, at least when we can find the supply, notes the PlasticsExchange in its weekly report. Producers have been very disciplined with production, which has limited prime spot material availability. Reduced reactor rates also tend to generate a larger ratio of wide-spec resin, however. While off-grade resin has been discounted and PP contracts fell $0.06/lb in February and March, ready-to-ship prime spot material has become a challenge to source and commands a premium. PP producers will lean on this tight supply/demand dynamic as they look to implement a margin-enhancing increase between $0.03 and 0.05/lb in April, according to the PlasticsExchange.

Read the full Market Update on the PlasticsExchange website.

TAGS: Materials
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