The four-day workweek inevitably softened the spot resin markets, but overall volumes have been healthy in January, notes the PlasticsExchange (Chicago) in its Market Update. In fact, it's lining up to be the best month of the year!
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Polyethylene (PE) contracts shed $0.06/lb in Q4 of 2018, and producers’ attempt to recoup it all this month fell short or, from a processor perspective, produced a welcomed contract rollover.
Polypropylene (PP) contracts shed $0.02/lb to start the year, but it’s the same deuce that should have been relieved in December, as that $0.08/lb decrease was deemed a tad light. Still, the three-month $0.20/lb decline in PP contracts has brought processors substantial price relief, writes the PlasticsExchange. Exports are roaring, Houston warehouses are jammed full and as winter storms and record cold threaten to grip much of the United States, buyers are advised to plan resin needs accordingly, as logistics delays are expected.
Spot PE trading was on the lighter side, but still not so bad considering that it was a four-day week. Spot PE prices were flat across the board, finding some stability but no recovery. Overall volumes in January have been good, and were markedly better than in November and December. Processor demand has improved and it seems some restocking has occurred at these lower price levels. Caution is still in the air, however, as availability remains ample with additional new capacity on the horizon. The $0.06/lb price increase nomination has been rolled over to February, when producers will take one more shot at implementation. The export market remains active; with crude oil back in the $50/bbl range, international regions continue to source directly from U.S. producers and through traditional trading channels.
PP trading also lacked luster this past week. While the flow of offers was heavy, market clearing prices were only steady, though some consolidation occurred at the lower end of the range. As time passes and discounted railcars reach packaging warehouses and customer sidings, the PlasticsExhange reports that it is seeing fewer relatively high-priced offers from suppliers, as competition requires. “We are starting to see more HoPP Raffia for fiber, CoPP No Break and Random Clarified resins in the market; availability for these grades was generally scarce during much of [the second half of 2018],” noted the PlasticsExchange in its Market Update. “As we anticipated, both PGP monomer and PP resin contracts settled down $0.02/lb in January."
Forward monomer contracts are currently pointing to rising prices ahead for the next 18 months or so, beginning in February and March. Give resin availability, it might be prudent to begin buying a little more PP than needed for current processing requirements, recommends the PlasticsExchange.
Read the full Market Update on the PlasticsExchange website.