Spot resin trading improved last week, although the market is still very nervous. The flow of material was heavy again, and while completed volumes rose substantially (from dismal levels), offers have still been accumulating, writes the PlasticsExchange (Chicago) in its Market Update. Most, if not all, commodity grade polyethylene (PE) and polypropylene (PP) resins are readily available, and a very wide range of prices are quoted. Upstream energy and feedstock prices recovered somewhat, but plastics remained under pressure. Market participants anticipate further erosion ahead, as offers for shipments two weeks out are cheaper than material for immediate shipment. Incremental export sales remain seasonally challenged, compounded by the strong U.S. dollar and negative regional market sentiment.
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Spot PE trading was significantly more active, as a steady stream of offers continued to pelt the market and prices slid further. Most generic prime grades dropped another penny with various one-off deals done at steeper discounts. Resin has become plentiful; even previously scarce grades like LDPE film and LLDPE have emerged, shrinking their premiums. Houston traders have dropped their bids, looking to liquidate unsold lots rather than taking on new positions, and, as always, seeking back-to-back transactions, reports the PlasticsExchange.
Amid falling spot levels, some processors seem frustrated by the lack of clarity with November PE contracts and have minimized volume commitments. Several producers have lowered November PE by $0.03/lb, but others have yet to announce the magnitude of their decrease. While the price relief is welcomed by buyers, the $0.03/lb drop is not necessarily deemed a large enough break, and some are eying $0.05/lb to completely wipe away the September increase. Perhaps it will take through December to achieve the nickel or maybe shave even more.
PP trading picked up a bit and deals were flying if the volumes were large. Generic prime levels generally slid another cent, with larger discounts needed to move off grade. Resellers have maintained their effort to liquidate uncommitted material, accepting reasonable bids even if it generated a loss. November PGP contracts settled earlier in the month down $0.06/lb; the PlasticsExchange expects another range of PP contract price movement based on particular index markers, spot levels and monomer components.
Some PP buyers appeared willing to pay several cents extra for last-minute truckload shipments rather than buying a cheaper railcar. As prices cascade lower, they fear better deals will emerge before the bulk resin even arrives. That said, others have found deeply discounted spot offers compelling and worthy of multi-car orders. Price levels are generally seen from the mid $0.40 to mid $0.50 range based on quality and quantity; some isolated rougher material has been priced starting with a 3; homopolymer has been noticeably weaker than copolymer.
Read the full Market Update on the PlasticsExchange website.