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Weekly resin report: PE, PP prices trending down

TAGS: Materials
Weekly resin report: PE, PP prices trending down
Resin sellers chased bids amid weakening sentiment last week; the trend is expected to continue into May.

The immutable law of supply and demand caused polyethylene (PE) and polypropylene (PP) prices to dip the week of April 17. The flow of requests slowed, while railcar offerings increased and transactions were difficult to complete, reports the PlasticsExchange (Chicago) in its Market Update. Sellers chased bids amid weakening sentiment and prices for both PE and PP moved lower. PE contracts are rolling flat in April, and producers will give the second $0.03/lb increase another shot in May, according to the PlasticsExchange. PP contracts should see a sharp decline in April and another chunk of relief in May, as monomer costs deflate. Resin prices are slipping in Houston as the market seeks a level to trigger better export demand. 

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PE trading activity was limited last week. Buyer interest was lacking while suppliers were out looking for more orders. Availability has improved and most commodity grades dropped a penny. Processors successfully staved off the second half of the $0.06/lb increase in April; producers are expected to try again next month. At this point, processors and resellers both seem comfortable keeping inventories a little light, not fearing much potential upside to pricing. The discount between lower Houston pricing and domestic contract levels has grown. 

PP offers continued to cascade lower while bids dropped, as the market eyes a growing decrease in contract prices. After enduring $0.205/lb of first-quarter increases, processors anticipate quick relief, now that monomer costs have been falling fast. Resellers have been purging inventory and others appear to be taking low-priced orders for next month, expecting cheaper supply to match up, writes the PlasticsExchange. 

There are whispers that April PGP could settle at $0.42/lb, which would be down $0.10/lb from March. This is quite a significant one-month drop and processors will be looking to pull it all through to resin. With supply issues resolving, lower forward monomer costs indicate additional relief for May.

Read the full Market Update on the PlasticsExchange website.

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