While the flow of both seller offers and buyer inquiries trickled in below average in spot resin trading last week, transaction closing ratios were very high, reports the PlasticsExchange (Chicago). Both sides apparently came to deal. December historically has often swung between the best and worst month of the year, and it looks like it is gearing up to be a good one this time. With little more than a week concluded, physical resin trading performance as recorded by the PlasticsExchange has already exceeded half of a typical month. This past week also witnessed a continuation of the recent trend, where polyethylene (PE) prices fell further while polypropylene (PP) levels mostly held firm. The export market is showing better signs of life, but hurricane-related price and availability are still hampering the huge volumes that were expected to develop at this time. 

The spot PE market was active and good volumes of resin transacted along all the major commodity grades. Even though offerings were not overly abundant, most PE prices continued to slide a bit more every few days as the hurricane premiums continue to unwind. HDPE for injection rose the most, beginning even before the storm, and has since corrected the sharpest. With another cent coming out of the market this week, it is now priced back below HDPE for blow mold, which is still fairly snug, for the first time since September 2016. 

Processors are enjoying the recent PE price break, which ranges by grade between $0.07 to $0.20/lb and averages $0.10/lb, but most resins are still above pre-Harvey levels. The general consensus remains to buy lightly as needed, while working down inventories, with hopes of procuring at even lower prices come the new year. Resellers are currently still liquidating uncommitted materials, but have enough dry gun powder to pull the trigger on super holiday resin deals if they materialize. Even though the market has already come down significantly, the PlasticsExchange remains bearish, noting there is still likely more downside ahead for sellers. Remember, additional new PE plants are coming online. 

Spot PP trading was average, at best, as supplies are relatively tight and prices remain elevated. This past week, HoPP prices held steady, while CoPP eased a cent off the expanded premium that was garnered in the wake of the hurricane. Buyers are disappointed that PP prices have not really subsided like PE, but the PlasticsExchange points out that these markets are very different and that the divergence is justified. 

PP prices are expected to continue to outstrip PE, as there are no new meaningful domestic PP projects that will significantly enhance supplies. The market will still ebb and flow along the way with normal cycles, but PlasticsExchange analysts don’t anticipate huge downward price movements in the near future. Instead, upward pressure is expected in December, based on supply and demand and the potential for a small cost-push increase. 

Read the full Market Update on the PlasticsExchange website.