Spot resin trading remained healthy the last week of June. It was by far the most active month of the quarter and transactions were voluminous enough to contribute to robust results for the first half of 2018, reports the PlasticsExchange (Chicago) in its Market Update.
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Offers for both polyethylene (PE) and polypropylene (PP) continued to flow nicely, resellers sought to sell off their uncommitted inventory and, while some discounts were provided, the deals were not aggressively priced. Spot PE levels averaged about a penny lower, with a range of flat to down $0.02/lb, depending on grade. Spot PP availability continued to improve, with off-grade deals far more appealing than prime offerings. Overall, HoPP prices were flat this week, while CoPP added a cent. Export interest was a bit better and spurred along by rising crude oil prices, which added cost-push pressure to other international regions’ monomers and resins.
Trading in the spot PE market was very busy as June came to a close. Material availability continued to improve and spot prices were mostly a penny lower, with variance among the commodity grades, according to the PlasticsExchange. This was seemingly enough for buyers to find good value as orders arrived consistently, securing material ahead of the Fourth of July holiday week. Compared to a year ago, we now sit anywhere from down $0.04/lb in resins like high-density injection, where supply restrictions have resolved, to plus $0.10/lb for materials like high-molecular-weight PE. In the past year, premiums between resins have expanded and contracted, mainly based on supply-related issues. The PlasticsExchange expects to see this type of price movement continuing into the future.
Some confusion exists in the PE contract market, as some producers had reaffirmed their intent to raise prices $0.03/lb in June. However, market chatter and a major consultancy has signaled the market as flat this month, which falls more in line with spot market activity. The PlasticsExchange also believes that a flat settlement is most appropriate. International buyers found softening prices out of Houston to be workable, helped along by rapidly rising crude oil prices. North American PE producers still enjoy a major feedstock cost advantage to facilitate exports, which is how producers plan to move the bulk of all of the new PE production that seems to just be backing up. It’s also worth noting that the tariff situation is in flux, maintaining a level of uncertainty, and not just with China.
PP trading activity waned this past week—it was the slowest of the month. CoPP gained a penny, while HoPP remained flat. After several weeks of strong demand, most processors seemed to hold off purchases at the higher contract prices—up about $0.08/lb in June—that some see as peak levels for this cycle. Monomer has already topped. Resellers have been shedding inventories, but still desire nearly top dollar for material that is ready to ship, reports the PlasticsExchange.
Offerings from importers were priced softer as some felt exposed and sought to lock up fresh sales. The overall domestic PP market is still fairly tight and branded prime is priced at a sharp premium to good off-grade resins. Current monomer levels point to easing of cost-push pressure in July and beyond.
Read the full Market Update on the PlasticsExchange website.