Volumes and margins of spot resin activity the last week of April almost equaled the entire rest of the month, reports the PlasticsExchange (Chicago) in its weekly Market Update. Transactions were heavily slanted toward polyethylene (PE) over polypropylene (PP), which was supported by good export demand from Latin America and Europe. PE prices were mostly $0.01/lb lower, and while PP held steady, the market remained under pressure.
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The PE market was extremely busy as the month drew to a close. Resin offerings were heavy and began to accumulate, even though processors’ orders were also flowing. HDPE injection grades became a bit more available after an extended absence from the secondary market, and starved buyers were eager to scoop up the material. Generic Prime film-grade cars were decently discounted at month’s end; it will be interesting to see if well-priced availability remains in May, writes the PlasticsExchange.
Spot PE pricing eased as the balance of producers acquiesced to flat contracts in April; they will try to implement the second half of their $0.06/lb increase in May. PE contracts have already advanced $0.08/lb so far this year; however, many market participants believe that peak pricing is already in place. Market momentum has turned toward bearish, as several of the expanded/new petrochemical complexes get closer to completion.
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The spot PP market continued to languish: Generic prime pricing stayed steady, while off-grade levels slid further. The market’s high volatility has created risk, which generally translates to lower volume transactions. Although spot opportunities abound, processor demand remained cautious and resellers have been liquidating inventories or otherwise opting for fresh back-to-back transactions. The first quarter’s extreme cost-push price increases, which totaled just over $0.20/lb, crimped resin demand, as processors were concerned with their ability to pass along higher resin costs and ultimate profitability.
Soaring PGP costs and PP prices shut down the export market as well, and that channel again needs to be primed for higher volumes to flow offshore. Now that monomer costs and resin prices have been unwinding, traders and processors alike are again wary of procuring too much material, as lower prices appear to lay ahead. The modest $0.06/lb decrease for April PGP, which is likely to be passed through to resin contracts, still leaves much to be desired. A decrease of similar magnitude is now foreseen for May.
Read the full Market Update on the PlasticsExchange website.