The spot resin markets remained busy and, as has been the case all month, the vast majority of completed transactions were concentrated in polyethylene (PE) over polypropylene (PP). While it fell short of a big month-end inventory purge, the flow of good quality railcars was fairly consistent. Prices for most commodity-grade resins edged a tad higher as August approached along with pending price increases, reports the PlasticsExchange (Chicago) in its Market Update.

Spot PE activity was solid, with the bulk of PlasticsExchange’s traded volume concentrated in LL, LD and HMW film resins, with smaller deals done in each of the primary injection grades. Prices for most PE products added $0.005/lb, with the lone loss of $0.015/lb seen for HDPE injection, as some, still limited, supplies emerged. Contract HDPE Inj prices remain below spot levels, so only those truly short of material were willing to pony up to transact. In a rare case, which might be telling of times to come, injection material went unsold, even as its premium shrank. Despite a $0.03/lb price increase nominated by all PE producers for August, most resellers seem to be shedding inventories to scale back their market exposure as the next wave of much anticipated fresh production draws closer. 

PE producers collectively built nearly 600 million pounds of inventory in the past four months through the beginning of July, much of which was held back to serve customers during upcoming plant maintenance. The recent run-up in oil prices should help spur additional export demand, which could soak up some of the heavy supplies, but it still seems like a mighty big reach to implement and hold the fresh $0.03/lb price increase nominated for August, according to the PlasticsExchange. PE asking prices are expected to start the month higher, but they may fade as August moves along unless, of course, additional delays are announced for the new petrochemical plants slated to come online. If so, mid and downstream players that have been shedding supplies could get caught short of resin, and the new September $0.04/lb increase that has been floated by just one producer might find some support. At this point in time, however, it is hard to be bullish on PE for an extended period, commented the PlasticsExchange. 

PP trading activity was about average: There was a typical flow of buyer requests, supplier offerings and completed volumes. Processors that bought heavily in May and June worked down inventories in July and still seem comfortable despite a margin-enhancing price increase—as much as $0.05/lb—nominated for August. Still, PP prices added $0.005/lb this past week, as thinning supplies and the upcoming increase has enhanced the slightly bullish market sentiment. This week was the first time in several months that PP selling prices in the $0.40/lb range were not seen, even for good off grade. The market remains, at a minimum, balanced, leaning toward generally tight, with the potential to pop a bit in August, but likely not more than a couple  of cents, if that.

Read the full Market Update on the PlasticsExchange website.