Weekly resin report: Polypropylene contract prices soar

The spot resin markets quieted down a bit as May drew to a close. Although there was a fairly steady flow of inquiries from both buyers and sellers, completed volumes only ran about average, writes the PlasticsExchange (Chicago) in its Market Update.

Spot polyethylene (PE) prices were mostly flat, while polypropylene (PP) added one to two 2 cents amid another rally in PGP monomer prices. There remains uncertainty with regard to May PE contracts; while they are generally coming in steady to lower, ultimately, individual results could vary based on producer and product. PP contracts soared $0.05 to 0.07/lb and will see another sizable increase in June, according to the PlasticsExchange.

Export PE demand from Latin America and Europe is good and Asian traders remain consistent buyers; low-quality PP is finding its way off shore, but good off-grade resin has willing buyers here in the United States; hence, there is a better net-back into the domestic market. 

Spot PE trading finished May at a fairly steady pace, but still lacked the larger volumes seen the rest of the month. In general, the market feels spotty, reports the PlasticsExchange, with certain grades plentiful and others harder to find. The market is currently awash in materials like linear low-density (LLD) PE Butene and high-density (HD) PE Injection, while low-density (LD) PE for film and injection, are more difficult to source, at least at pricing at which processors are willing to transact. Despite the differences in supply, base transactional prices were mostly the same as the previous week and the PlasticsExchange’s official prices remained flat for all major grades. A definitive market-wide settlement to May contracts has yet to be seen with negotiations at times taking place on an individual customer basis. However, the general consensus is that HD and LD are rolling flat with LLD dropping $0.03/lb. It should be noted that May began with a $0.03/lb increase on the table for all grades. 

PP trading was challenged by scarce supplies and rising prices; despite the effort, completed volumes fell short of average. May PP contracts rose $0.05  to 0.07/lb; a nickel for the jump in monomer costs and producers will achieve as much as a $0.02/lb margin increase, as well. The market was then shocked mid-week by another surge in spot monomer costs, which foretold another jump in PP contracts for June. Buyers were looking to scoop up cheap offers, but with limited resin available, sellers were not shy about pulling supply off the table or simply raising asking prices. Resellers were apprehensive to buy late in the week at the new higher levels, unless it was for a back-to-back transaction. While some buyers’ initial responses might be to wait out this cycle, there are some real supply issues that could help keep PGP and PP prices elevated for a while.

The PlasticsExchange notes that it has been vocally bullish on PP for some time, as supply/demand dynamics have been too tight to withstand disruptions. It remains bullish still. 

Read the full Market Update on the PlasticsExchange website.