What a difference a week makes. Not a creature was stirring on the spot resin markets at the end of December, but buyers came roaring back at the beginning of January, more than making up for lost time.
|Image courtesy Cool Design/|
As the year drew to a close, some processors shut down for vacation, others drew down inventories to aid financial statements while yet others anticipated that the trend of lower prices would continue, reports the PlasticsExchange (Chicago) in its Market Update. Consequently, there was a flurry of pent-up demand and processors rushed to the market the first week of January to procure material. While suppliers still seemingly played Scrooge with their resin, and offers only trickled in, the PlasticsExchange trading desk scoured the market for relatively well-priced supply, filling about 75% of all incoming resin requests.
Spot polyethylene (PE) trading was extremely busy, even in the holiday-shortened week. Buying activity was very strong, with good demand seen across all major commodity PE grades. This past week all PE materials rose $0.01/lb, in contrast to the past three solid months of price erosion, while levels retreated back toward pre-hurricane days. Although spot PE prices have returned to a discount to contracts, and a major consultancy recently estimated a $0.03/lb decrease for December, producers do not seem to have budged on contracts marketwide. In fact, one producer even just nominated a $0.04/lb price increase for February, notes the PlasticsExchange, which expects other producers to follow suit. Whether or not the increase is viable is another matter, and it is way too early to judge, writes the PlasticsExchange.
The spot polypropylene (PP) market really perked up in the new year. Snug supplies and soaring feedstock costs sent buyers to the market, driving average prices $0.02/lb higher. PP copolymer continues to be the demand leader, especially high flow material that commands a premium. PP homopolymer is also scarce, but aggressive buying has been lagging. Spot PGP prices have been leaping higher, and could lead to a January cost-push increase. The market is further supported by tight supplies and rising prices in Europe, with demand overflow requests reaching the United States. Noting that it has been bullish on PP prices for at least five months, the PlasticsExchange maintains its upward outlook even as prices approach lofty levels.
Read the full Market Update on the PlasticsExchange website.