Weekly resin report: It’s a buyer's market, as PE, PP prices lose ground

Spot resin trading settled into average-volume territory last week, as soft energy and feedstock costs, particularly in the polypropylene (PP) chain, took a stronger grip on the market. Nearly all grades of polyethylene (PE) and PP lost ground, typically between $0.01 and 0.02/lb, with off-grade lots taking a larger hit, reports the PlasticsExchange (Chicago) in its Market Update.

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Material availability increased across the board, as resellers sought to sell their uncommitted stocks and passed along unneeded railcar offers in an effort to trim inventories. PE producers, who amazingly have held contract prices at elevated levels even as spot prices slide, aim at least to maintain an average increase of $0.03/lb on the table for November, reports the PlasticsExchange. PP producers will look to gain some margin as they will imminently decrease November contracts, but by a lesser magnitude than their feedstock cost savings.

Spot PE trading was a bit sluggish this past week, taking a breather from the furious pace of the past few months. The market was not anemic, as an historically average volume of material changed hands, but it was a tad disappointing as the Thanksgiving holiday later in the month could also crimp activity. Overall trader-to-trader dealings were muted, with most of the chatter coming from suppliers looking to move uncommitted warehoused inventory. Fresh railcar offers did begin to show later in the week and almost all PE grades lost a penny, except for still snugly supplied high-molecular-weight PE for film, which held its level. With prices giving back what they earned in the previous week, the gap between contract and spot prices remains quite wide. Even so, an average $0.03/lb price increase is nominated for November PE contracts, although implementation seems unlikely at the moment, according to the PlasticsExchange.

While PE exports remained very strong in October—above 1.25 billion pounds—as crude oil tumbles and international traders reduce target bid prices, incremental exports through the secondary market are challenged.

PP trading was quiet during the first part of the week as processors reduced their purchases, opting to work down inventories and wait for lower prices ahead. Those in need of material were pleased to see cheaper deals already entering the spot market amid increased availability for both homo-polymer and co-polymer PP resins. Many domestic railcars, some prime but mostly off grade, were offered anywhere from $0.03/lb to 0.05/lb lower than the previous week. Spot prime truckloads for immediate shipment are still holding on to their premiums, which is typical and fair in a falling market to buyers seeking single loads to hold them over while they search for lower railcar pricing. The PlasticsExchange expects PP contracts to decrease at least $0.10/lb, as feedstock costs decrease while producers also seek some margin expansion.

Read the full Market Update on the PlasticsExchange website.

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