The spot resin markets remained sluggish, but a good flurry of late activity helped to salvage the week of Feb. 20. The flow of both polyethylene (PE) and polypropylene (PP) offers into the secondary market improved a bit, providing better market liquidity, but resin is not considered abundant. The $0.05/lb PE price increase was firmly implemented on February contracts, with some PE grades pressing another penny higher this past week. Most PP contracts increased $0.065/lb in February, commensurate with the rise in PGP monomer contracts. Spot PP reversed the slightly softening sentiment and rose another cent on the heels of another surge in spot monomer, reports the PlasticsExchange (Chicago) in its Market Update. 

PE activity was sporadic. There was a light but steady stream of railcar offers, which reflected the $0.05/lb increase that has been fully implemented this month. Incremental domestic demand has been lacking, as major processors seem to be well served with direct availability. Most resellers concur with the sales challenges during February, and while suppliers are out looking for orders, nobody is willing to really dump on price. The PlasticsExchange notes that it did fill a series of spot needs among several different PE grades that have been scarce, including LDPE film, HDPE film and high flow for injection molding. 

The lack of plentiful PE material, given very high margins and lackluster demand, points to reduced operating rates. While there have been planned outages, recently sliding monomer costs could be indicative of production issues this month. High-volume PE export sales are still stymied by relatively high U.S. levels, though international markets have stabilized and seen a minor up-tick. Producers have another $0.06/lb price increase on the table for March, but that would require renewed upward momentum to take hold, according to the PlasticsExchange. 

PP trading was average, at best: Demand remained unenthusiastic, dictated by as-needed requirements. However, after two weeks of flat pricing, the PP market has resumed its rally. While PP only gained a cent this past week, it was in reaction to another cost-push drive as spot PGP ran up almost $0.05/lb. Processors are still knee-deep from the $0.165/lb contract increase during January and February, but rather than getting some hopeful relief in March (which the PlasticsExchange never thought would happen), the market is poised for yet another increase ahead. 

The days of PP that starts with a 4 (and even a 3) already appear like a long-ago dream. Suppliers with uncommitted resin on hand seem to be raising their asking price a little on each request. The market is working its way through the $0.50/lb range, and while hearing PP in the $0.60/lb range initially sounded a bit shocking, it is again becoming commonplace. Buckle up: There appear to be no signs of this rally ending any time soon.

Read the full Market Update on the PlasticsExchange website.