Weekly resin report: PE prices hit decade-long lows, but don’t get too comfortable

Spot resin trading slowed last week and resin prices were mixed, reports the PlasticsExchange (Chicago) in its Market Update.

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The polyethylene (PE) trend has been bearish, and processors seem to assume that prices will simply move lower week after week, but sometimes the low-ball bids get ahead of themselves and sellers back away from participation. The PlasticsExchange observed several iterations of this last week, noting that it seemed particularly out of place considering that low-density (LD) PE remains tight and actually moved higher again. Polypropylene (PP) activity grabbed the spotlight, as lower monomer costs encouraged more aggressive selling, both in price and volume. Processors, some of whom are in the midst of their peak demand period, were happy to enjoy some added savings. PE producers are taking another stab at a $0.03 to 0.04/lb price increase this month; PP contracts will basically follow monomer, which at the moment is looking fairly steady. Exports are robust and incremental orders are available, if sellers wish to chase ever-falling international bids. 

The spot PE market was somewhat uninspired this past week and general activity levels were below the active pace seen throughout much of the summer, writes the PlasticsExchange. Completed volumes slipped below average, as many participants sat on the sidelines, yielding a lack of fresh inquiries and interesting offers. Completed transactions at the PlasticsExchange trading desk were skewed toward prime rather than off grade, with a concentration on film grades. Spot prices continued to move around with continued pressure on high-density PE grades, while LDPE for film added another $0.005/lb as a result of notably tight supplies, particularly for material ready for immediate shipment.

Despite ongoing price increase attempts and generally opaque pricing, most PE contracts seem to have decreased $0.06/lb over the past few months. Even with rumblings of an economic slowdown and all the new resin production, PE producers remain prepared to increase prices by as much as $0.07/lb if the right situation presents itself, according to the PlasticsExchange. This could stem from a Middle East military conflict, which the Saudi oil attacks have put back on the front burner; severe weather situation; trade war resolution; or any other significant supply chain disruption. With most PE prices now at decade-long lows, current price levels are very favorable to processors and worthy of an added inventory buffer given potential upside risk, recommends the PlasticsExchange. 

PP trading returned to its rampant pace last week and completed volumes were high, again tallying above the typical weekly average of the past couple of years. This heightened level is starting to become the new norm, writes the PlasticsExchange. Homo- and co-polymer PP resins each lost a penny, as they followed declining PGP costs. An ample supply of both homo- and co-polymer PP in packaged truckloads and fresh railcars to ship as well as bulk loads staged and ready for shipment were available. It is worth noting that the PlasticsExchange trading desk was offered material by more traders than normal, perhaps a sign of some worry as the PGP forward curve continued to flatten. The market was starting to feel neutral/bullish, especially with some planned turnarounds and maintenance ahead, but it now seems to have lost a little steam and sellers are more open to moving material as opposed to holding out for the anticipated higher sale.

Read the full Market Update on the PlasticsExchange website.

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