The spot resin markets were active and transacted volumes were relatively high during the week of Oct. 24. Products along the entire energy-to-plastics supply chain ended the week in the red, and resin market sentiment turned decisively negative, reports the PlasticsExchange (Chicago) in its Market Update. 

Processors who were not in urgent need of material backed away from procurement, even if discounted month-end offerings seemed like a good deal. Resellers redoubled efforts to sell uncommitted inventories and otherwise sought only to complete back-to-back transactions. Export interest from Latin America and Europe was good, but it was soft from the Asian and Indian regions. 

The polyethylene (PE) market remained weak: The flow of offers was fluid and prices fell. Off-grade railcars were discounted and generic prime was available from resellers who owned material still requiring disposition prior to month end. There was good availability across the commodity resins and price drops of $0.02/lb were common; the lone standout again was LDPE Clarity, which is still tightly supplied. Completed volumes were heavy and spread among grades, with the bulk of transactions concentrated in LLDPE, both injection and film. 

While the $0.05/lb contract increase has held through October, the spot market has dipped this month. Considering some deeply discounted prime railcars that were available late in the week, certain PE grades have even dipped below pre-increase levels. Some processors viewed the offers as a good buying opportunity, while others were frightened off, feeling that it was a sign of things to come. It will be interesting to see if the special deals will continue or if it was just an aggressive end-of-month purge. Either way, with material availability improving and spot levels slipping, processors are rumbling for contract price relief ahead. 

Spot polypropylene (PP) trading was good, but not great, according to the PlasticsExchange. Buying was unenthusiastic and prices shed $0.02/lb. PP supplies remained adequate even though planned maintenance projects restricted resin production. While some processors buffered their inventories, the continued availability provided others with confidence that any near-term upside risk would be limited. Spot PP prices eroded these past couple of weeks in anticipation of those reactors beginning to return online. 

Plentiful material even minimized the implementation of prior cost-push price increases, which remain in the market to varying degrees. The PlasticsExchange reports that it is now seeing a large gap develop between contract and spot, as generic prime has slipped back to lows seen during the summer. Faring worse, off grade has taken the brunt of the hit, as challenging export markets limit high-volume outlets—export bids for wide-spec have dropped down to $0.40/lb and below. October PGP contracts finally settled with a $0.015/lb decrease; that or more should be passed through downstream.

Read the full Market Update on the PlasticsExchange website.