Weekly Resin Report: PE, PP Prices Continue to Tick Higher

Spot resin trading maintained a swift pace last week. Demand was very good and supply remained constrained, yet available, reports the PlasticsExchange in its Market Update. Prices continued to tick higher, as all commodity polyethylene (PE) and polypropylene (PP) grades added another $0.005/lb last week. Processors absorbed the June $0.04/lb PE increase in stride and the upward momentum has been sustained into July, which now brings the next $0.05/lb increase currently on the table into focus.

PP contracts were steady to a penny higher in June and are poised to jump a cost-push nickel or more as monomer prices run higher on the heels of several production outages. Export demand for both PE and PP remained strong, though there was some resistance from international traders after producers offered incremental July allocations with a significant price hike. Still, high export turnover persisted and continued to provide a rising floor and ample outlet for material, which in turn supported domestic pricing, according to the PlasticsExchange.

Rising prices and healthy volumes made for a strong week in PE trading. A flurry of inquiries reportedly landed on the PlasticsExchange trading desk throughout the week, and an above-average volume of resin changed hands in the spot marketplace. Overall availability was barely ample — relatively scarce grades came in spurts, and limited railcar offerings were scooped up fairly quickly. Low-density and linear-low-density PE for both film and injection were in high demand, as was high-density (HD) PE for film and blow molding. The one commodity material that seemed to lag was injection-grade HDPE. Spot prices inched up another half cent, as the case for producers’ $0.05/lb increase efforts strengthened, notes the PlasticsExchange. Back-to-back increases without a hurricane or major production disruption are difficult to secure, but if the strength continues, some or all of the increase is certainly possible. Although some pushback developed from purchasers, the higher spot prices were generally accepted as resellers’ inventory replacement costs have seemingly been rising faster than general sales prices. Export activity continued to be robust with good demand seen from all major regions, especially China and Asia, in general. 

Spot PP trading was very busy last week. Demand was hefty and supply was initially sufficient but then thinned out as material sold. While railcars continued to be a heavy mover, ready-to-ship truckloads were also in high demand. The majority of transactions took place as back to back, but the PlasticsExchange adds that it also filled a number of orders from inventory. Spot PP prices inched another half-cent higher and seem to have more upside ahead. Resellers were the biggest buyers, as they snatched up railcars eying rising monomer costs with the belief that resin prices will continue to increase. Processors also came with purchase orders in hand, but were sometimes too slow to pull the trigger and missed opportunities. Current spot PGP prices rose another penny from last week and now point to a $0.05/lb or more increase for July contracts. Producers have also nominated a three-cent margin increase for August. Reactor maintenance could support the endeavor, but there is also a new plant slated to come online. The PlasticsExchange adds that it would not be surprised to see another busy week ahead as the imminent July price increase works its way through the market.

Read the full Market Update on the PlasticsExchange website.