Weekly resin report: PE producers hold back on October price increase

With many market participants attending K 2019 in Düsseldorf, Germany, the spot resin markets slowed a bit last week. The supply-and-demand flow turned sporadic but a surge of late-week export deals lifted the total tally, reported the PlasticsExchange (Chicago) in its Market Update.

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Resin prices were relatively steady with some fractional losses posted against a couple of polyethylene (PE) grades. Producers seemed more content to simply hold on to their domestic $0.03/lb PE price increase implemented in September, rather than try to advance prices further, considering their additional $0.04/lb increase for October (which had temporarily been revised up to $0.08/lb). The increase remains out there in case of a significant supply disruption, according to the PlasticsExchange. Polypropylene (PP) supplies have thinned to support recent price levels, even as monomer costs ease. PE and PP exports remained robust and this trend appears poised to continue in the near term and beyond.

Although the spot PE market was a touch slower last week, probably because of the K, there were still opportunities; the PlasticsExchange said that its trading desk made the most of the lighter deal flow, even finishing Friday with a flurry to bring completed volumes up to average. Spot prices were steady, except for blow molding and linear-low-density PE film, each of which lost a half-cent. Processors seemed to find value at these favorable price levels and were comfortable procuring material beyond their immediate needs. While the PE market could continue lower, there is more risk to the upside than downside, according to the PlasticsExchange.

Transactions were completed across all commodity grades and, in a rare occurrence, off-grade transactions outnumbered those for prime material. After an uptick in spot prices the previous week, the semi-surprising $0.03/lb September increase seems to be firmly intact while the $0.04/lb for October remains doubtful, barring any market-shaking news. Logistics in Houston remain challenging, as packing delays are very real; extra planning is required, placing a premium on loads that are ready to ship.

PP trading was solid, with healthy completed volumes and firm pricing. Supply was a bit underwhelming and it took extra care and a little higher pricing to source the railcars necessary to fill customer needs, said the PlasticsExchange. Truckloads were more prevalent than railcars and homo-polymer was easier to procure than co-polymer PP. Though PGP monomer slipped another cent, spot material has already been well-discounted to contracts; availability was a tad tighter than in recent weeks, causing the PlasticsExchange to hold its spot prime prices flat. October PP contracts are expected to soften a little along with monomer, but analysts at the PlasticsExchange maintain a neutral to slightly friendly bias to spot pricing from this level.

Read the full Market Update on the PlasticsExchange website.

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