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Weekly resin report: Polypropylene contracts expected to soar by as much as $0.10/lb in January

Weekly resin report: Polypropylene contracts expected to soar by as much as $0.10/lb in January
A $0.04/lb price increase also has been nominated for polyethylene in February.

The spot resin markets remained extremely busy last week, with the pace of activity and completed volumes surpassing the previous week, reports the PlasticsExchange (Chicago) in its Market Update. 

Cool Design
Image courtesy Cool Design/

Processors still seem to be catching up with purchases and doing some inventory restocking, as many had limited their buying going into the end of the year. Spot supplies of polyethylene (PE) and polypropylene (PP), which have been fairly snug in this young year, improved a tad. Still, spot resin prices have been on an upswing, with fresh gains of $0.01 to 0.04/lb seen. The PlasticsExchange expects PP contracts to soar by as much as $0.10/lb this month. There is also a $0.04/lb PE increase nominated for February. 

In spot PE trading, processors went to town, scooping up well-priced offers and willing to pay up, as needed. Volumes were high and deals were spread among the major commodity PE grades. Resins such as HDPE, including all film, injection and blowmold grades, whose prices were hit the hardest during Q4, have had the strongest recovery. Recent big winners include HMWPE, which added $0.04/lb, and LDPE film, which jumped $0.03/lb, as it rebuilds its premium to LLDPE, reports the PlasticsExchange. Confusion regarding contract pricing carried over into the new year, as some found relief in December, but results varied by market participant. The sharp break in spot levels agreed with a decrease. To the surprise of most, all major PE producers have now issued a $0.04/lb price increase for February. 

The PP market has gone from ho-hum to hold your hat! PP contracts in January should see a cost-push increase of around a dime, with no major relief in sight. Eyeing higher prices ahead, buyers have been grabbing every seemingly good deal in sight, sending prices up another $0.02 to 0.03/lb. Current availability has been dwindling, with CoPP and all high-flow PP quite scarce. Strong PP production, which led to upstream inventory builds in each of the last three months, has returned total supplies to almost average. However, there is pent-up demand from previous processor destocking, so market dynamics remain bullish, according to the PlasticsExchange. There has been a relatively steady stream of PP imports as part of an overall supply strategy, initially sparked by the fierce PP rally two years ago, but speculative imports have been observed on the water and will soon hit the shores. 

Read the full Market Update on the PlasticsExchange website.

TAGS: Materials
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