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April 12, 2016

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Weekly resin report: PE prices mixed, PP market soft

After a couple of very busy weeks, the spot resin markets took a breather at the beginning of the week of April 4. Resin trading, however, did pick up steam as the week progressed, reports the PlasticsExchange (Chicago).

Polyethylene (PE) prices were mixed and polypropylene (PP) was pressured further. While fresh railcar offerings were limited, resellers provided good liquidity from their inventoried stocks. Crude oil added nearly $3/bbl and is again bumping the $40/bbl level. NGL feedstocks were stronger, while ethylene and propylene monomers were both a bit weaker.

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The PE market began April with a fair amount of uncertainty. March contracts were up $0.05/lb and there is another $0.04/lb increase on the table this month. PlasticsExchange analysts, however, witnessed a large volume of discounted material available the previous week, which was also the end of the quarter. Trading partners weighed the aggressive late-month offerings against the possibility of additional price increases as producers look to leverage the existing upward momentum to implement back-to-back increases. Current expectations range from flat to up $0.02/lb or even $0.04/lb, with no serious thoughts toward a contract price decrease in April.

There were relatively few prime PE railcars offered into the spot market this past week, and those which were available reflected the new $0.04/lb increase, although price protection was in effect should the increase erode. Off-grade railcars jumped several cents, recouping the late month discounts plus a little bit more. A number of exporters and traders hiked their asking prices for packaged resin by about a nickel, but with no buyers willing to pay that much, prices quickly came back down $0.03 to 0.04/lb. Some suppliers were even willing to deal at levels flat to the previous week, notes the PlasticsExchange.

Prices for different PE grades have been re-aligning in the spot market. This week, HDPE prices for blowmolding and film were steady and injection slipped a half-cent; the HDPE group is up $0.045 to 0.06/lb from the February cycle low. LDPE and LLDPE injection grades have been rebuilding their premiums; they each gained another cent and respectively sit at $0.08/lb and $0.09/lb from their swing lows.

The spot PP market was relatively quiet; neither buyers nor sellers seemed overly compelled to transact. Still, prices were soft, as offers have lingered. While a good deal of the oft-mentioned imported PP has made its way to processors, plenty of fresh material is still hitting the shores. These competitive offers have been leaning on domestic prices, which, on average, shed another cent this past week.

In general, spot PP supplies have improved. Most prime commodity grades can be sourced around the country in decent quantity and there is a steady supply of off-grade in Houston. As the market has slowly dropped down to the lowest levels since last summer, resellers are again looking to shed—but not dump— their uncommitted inventory.

The PlasticsExchange clearinghouse is finding a wide range of contract prices at the end user level. This is largely because of the inconsistent implementation of margin-enhancing price increases during the first quarter coupled with small gyrations in PGP monomer costs, which are generally, but not always, passed on to resin buyers. There seems to be a case for April PP contracts decreasing $0.03 to 0.05/lb, somewhat offset by the likely $0.01/lb increase in April PGP monomer contracts.

Read the full Market Update on the PlasticsExchange website.

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