Weekly Resin Report: PE Demand Ebbs, As Buyers Anticipate Lower Prices Ahead

Spot resin trading got back on track after an abnormally slow week, as availability improved, prices were steady to lower, and completed volumes ran strong, reports the PlasticsExchange in its Market Update.

Polypropylene (PP) demand continued to outshine polyethylene (PE), and a heavier flow of PP offers was snapped up by buyers who had been short of material. By contrast, PE demand has waned and was off pace for the second week in a row. Buyers generally have shifted to making minimal purchases to fill in spot needs as they believe that prices have peaked in this leg of the market cycle.

PE contracts are rolling steady in October, writes the PlasticsExchange. The current nominated nickel will be attempted again in November. PP contract prices also might fully confirm flat this month — PGP contracts did not see a net price change and some PP producers have delayed their margin-enhancing increase until next month. Solid volumes of resin continue to ship offshore, and Houston prices have begun to ease back to a level that could inspire incremental sales. 

Spot PE trading improved from the prior slower week, but completed volumes at the PlasticsExchange still fell short of the elevated average of the previous three months. A better flow of offers was seen, including groups of generic prime railcars and some surplus export. Demand was tepid — buyers took another step back as prices eased. Those in need of material reduced their volumes in hopes that prices will continue to slide toward year-end, peeling back some of the large $0.19/lb gains as the market rebounded aggressively from the COVID-induced trough.

While offers for some PE grades began to accumulate, overall availability was not flush and some grades were still very difficult to source. Spot prices were mixed for snugly supplied resins, including high-density blow molding, injection grades of low-density, and linear-low-density PE, all of which held steady. Penny losses were sustained for the remaining commodity grades, including high-molecular-weight PE film, high-density injection, and low-density and linear-low-density PE film. Producers will roll their $0.05/lb price increase efforts to November. Based on spot market activity, however, the PlasticsExchange believes that implementation will be a daunting task now that upward momentum has stalled.

Strong demand for PP resin

PP trading returned to a more hectic pace with completed volumes reaching a high level. Spot demand continued to be very strong, as both processors and resellers sought material to catch up from supply-starved conditions. Indeed, availability has begun to improve as new and offline reactors have ramped up resin production. Large volumes of off-grade low-flow homopolymer were seen, then higher flow railcars and, more recently, transitional resin into more complex Random and Block co-polymers. By the end of the week, some spot Prime appeared, notes the PlasticsExchange in its weekly report. Buyers were unafraid by the increased offerings — most were simply thankful for supply relief.

Most co-polymer PP was scooped up quickly, as availability again trumped price. Homo-polymer PP was easier to source and slower to move. Enhanced liquidity eased upward pricing pressure, and the benchmark homo- and co-polymer PP prices gave back a penny for the first time in 11 weeks after gaining 14 cents during that same period. It seems that pent-up demand remains, but at some point the PlasticsExchange expects buyers to become satisfied and then foresees some deeper discounting as spot prices remain well above contract levels. In the meantime, monomer prices have been flat, disabling a cost-push PP increase, and some producers seem to have backed away from their October margin enhancer.

Read the full Market Update on the PlasticsExchange website.