Weekly resin report: Polyethylene producers fail to implement $0.03/lb increase on May contracts

Spot resin trading activity maintained its rapid pace last week, with the second half of the month outstripping early May volumes, reports the PlasticsExchange in its Market Update.

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Most polyethylene (PE) and polypropylene (PP) grades scored moderate gains, with just a few PE commodity resins losing slight ground. PE producers were unable to implement their current $0.03/lb increase on May contracts, which many processors would consider a win. However, many of them had hoped for a market-wide decrease, which also is not coming through. Most PE grades seem to be gearing toward a flat settlement; perhaps, some will still decline. PP producers are raising May contracts by at least the same $0.05/lb increase heard for PGP contracts, and are leaning on snug supply/demand market dynamics to bump prices up another cent or two, as well. 

The spot PE market continued to transact at an active pace, although phones fell quiet on Friday, as many participants escaped early for an extended Memorial Day weekend. Perhaps the better buying was simply processors positioning themselves into month-end, muses the PlasticsExchange, but it was more likely the renewed feeling of tightening supplies that again permeated the secondary market this past week. Although an ample—if not overly abundant—supply of resin should eventually prevail, producers have been extremely disciplined with their offers, even as their collective inventories continue to swell to record levels. In the meantime, certain grades such as low-density PE and linear low-density PE for film did become more scarce, in sharp contrast with its easy availability the previous week. As a reflection of such, spot prices for these materials rose by as much as $0.02/lb, while other grades, such as high-density PE for blowmolding and injection, lost up to a penny. 

The opacity of the contract market is not helping to provide transparent pricing, even as a simple gauge of price change. A large consultancy estimated mixed results for May contracts, which ranged from flat to $0.03/lb lower, depending on grade. However, market chatter revealed that not all producers are recognizing this suggestion as final pricing, as some wish to hold monthly prices flat for most, if not all, PE grades. Negotiations probably will continue through the end of the month. This is a good reminder that, despite massive production expansion that has already become operational, with plenty more still to come, the North American resin market can still ebb and flow. The PlasticsExchange expects many smaller market cycles to occur amid the larger trends. 

PP trading was a bit quieter this past week, but not necessarily from a lack of interest. A stark mismatch has been observed between desired resins (mostly prime high-flow HoPP and CoPP) and available spot supply (mostly off-grade lower flow PP). The PlasticsExchange reports seeing another surge of imported prime PP reaching our shores; based on higher pricing that will confirm for May contracts, the importers were at a minimum fortuitous, if not outright wise, according to the resin clearinghouse. Spot PP prices added another $0.02/lb this week with sharper gains seen for scarce PP Random Clarified and CoPP No Break. PGP monomer contracts were reportedly up a nickel for May and producers are still looking to implement an additional $0.01 to 0.02/lb of margin expansion.

Read the full Market Update on the PlasticsExchange website.

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