Weekly resin report: Last-minute surge in spot resin trading turns July from average to exceptional

Spot resin trading surged on the last day of July, turning the month from just average to exceptional, reports the PlasticsExchange (Chicago) in its Market Update. Film grades, including LDPE, LLDPE and HMWPE, were the most actively transacted materials; while completed polypropylene (PP) volumes were okay, they were still somewhat uninspiring, according to the weekly report.

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Railcar offerings were fairly steady, though resellers’ warehoused inventories appeared to be on the lighter side. Spot levels for both polyethylene (PE) and PP were mixed. Overall exports were a bit better, especially to Latin America. August price increase nominations for PE and PP have some potential, but they are far from a slam-dunk, according to the PlasticsExchange.

PE trading was strong as the month drew to a close; volumes were high and prices were mixed by grade. Spot prices for all PE film grades were softer, which generated good processor buying interest. Supplies of HDPE for blowmolding snugged up a bit and added a full cent. Low-flow HDPE injection has become less tight, but high-flow material is still super scarce and commands an extraordinary premium. Producers will invoice PE contract sales up $0.03/lb during August, but it’s not certain the increase will hold. At least a second producer nominated an additional $0.04/lb increase for September sales. At this point in time, back-to-back price increase nominations create a potentially precarious situation for resin buyers. 

After extended delays, another round of much anticipated new PE production capacity is now imminent. While producers have been pre-marketing the new material and are otherwise targeting exports for the balance, the forthcoming increased supply will impact the market and likely weigh on prices, according to the PlasticsExchange. Nobody wants to get stuck with extra high cost resin, so resellers have been shedding surplus pounds while limiting purchases, which is making for a tightly supplied secondary market. Additional production delays could leave the market short of material and lead to interesting spot trading over the next couple of months, but it seems that most would rather miss out on a good opportunity than be over-committed and later sorry. 

The spot PP market continued to sputter along. The PlasticsExchange saw a relatively consistent stream of buy orders, but it was mostly for truckload needs. Pure commodity grades of PP, both homopolymer and to a lesser extent copolymer, were mostly available and well-priced, while specialty resins were scarcer and offered with a sizable premium. Rougher wide-spec PP resin is again being discounted for export and the overall PP market lost ground.

HoPP eased a half-cent and CoPP gave back an extra penny that it had previously garnered. Despite slightly bullish fundamentals, PP producers will find some challenge to implement their margin-enhancing price increase, as much as $0.05/lb, slated for August. Some of it, however, could take hold. 

Read the full Market Update on the PlasticsExchange website.

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