Polyethylene (PE) transactions greatly outstripped polypropylene (PP) in the first full week of February, and prices for both resins rolled from week-ago levels, reports the PlasticsExchange (Chicago) in its Market Update. Trading has been sporadic for the past several weeks, with surges in demand amid periods of relative quiet against a steady to heavy flow of supply. It is easier to source PE in truckloads and PP in railcars.
|Image courtesy Cool Design/|
PE producers are now seeking a $0.03/lb increase for February contracts to recover half of the $0.06/lb decrease implemented during the fourth quarter. PP contracts had been looking steady, but now appear to be heading about $0.02/lb lower. PE export demand remains strong, even as many market participants took a break for the Chinese New Year.
PE trading was very active this past week, reports the PlasticsExchange. Spot demand was robust and completed volumes were high. As usual, there were urgent truckload orders required to keep some plants in resin; processors also came to fill basic requirements, as a slightly bullish bias seems to be developing. Some who only procured minimally in January in the hope that year-end pricing would still be around were disappointed. Regardless, sellers were happy to provide sharp offers, as availability remains ample even as turnaround season approaches.
Despite the hefty trade, there was not enough of a shift in supply/demand dynamics to move the needle on the official PlasticsExchange spot prices, and all grades remained flat last week. The recent $0.06/lb price increase has been split to three in February and three in March, but PlasticsExchange analysts do not yet feel that there is substantial traction. The discount that spot holds to contracts probably remains too high to warrant an increase at this time. The export market took a slight breather this past week, as the Chinese New Year came on Tuesday. It should pick up again quickly after the holiday break.
The spot PP market was uninspired this past week, continues the PlasticsExchange in its weekly report, and prices for both homo-polymer and co-polymer PP held steady. Buyer inquiries, which trickled in at a slower than average pace, favored low-volume orders. While railcar offers were flowing swiftly, relatively little uncommitted PP resin packed and ready to ship by the truckload was seen. Even when the right resin was sourced, transactions were difficult to complete, as there was often an insurmountable disconnect on price.
The PlasticsExchange anticipates further weakness in contract prices, as PP has been moving lockstep with PGP contracts, which suddenly looks slightly lower again for February. The resin clearinghouse is not seeing surplus imported PP in the market, as the easy import arbitrage opportunity closed when PP contracts dropped $0.20/lb over the past three months starting in October.
Read the full Market Update on the PlasticsExchange website.