June began with a bang, writes the PlasticsExchange (Chicago) in its weekly Market Update. The spot resin markets were busy all week and prices for most commodity-grade materials rose. The number of completed transactions was high, and spot polypropylene (PP) trading volumes outstripped polyethylene (PE), which was rare, but certainly not unprecedented.

PP demand was very strong last week, stressed the PlasticsExchange, with buyers looking for sharp spot deals as contract prices are poised to jump again this month. PE contract prices are in flux—most producers appear to have split May with a $0.03/lb decrease for linear low-density PE, with the other commodity PE grades flat. Remarkably, it has been an entire year since the last market-wide PE decrease actually came through. Export demand from Latin American traders remains healthy, while other regions have quieted a bit. 

Spot PE trading had a very healthy start to the new month. The PlasticsExchange was flooded with activity and buyers outnumbered sellers. While some grades were still difficult to source, such as low-density PE High Clarity, high-density PE for milk bottles and high-molecular-weight PE for film, processors did jump on other good opportunities when presented. Although price is often king for the commodity grades, when on-hand inventories are dwindling, availability trumps all and processors have been paying up to keep their machines running resin. Sensing this, suppliers inched up spot prices where they could, while those grades deemed amply supplied have lost ground. 

The inconsistent nature of PE supply over the last several weeks (and months) has led to a premium developing for material that is ready to ship versus two weeks out. Downstream resin participants have been hoping that all the new production coming on stream would bring lower prices, but this has not fully materialized, though the potential remains. Lacking definitive direction, PE prices were mixed last week: Changes were seen anywhere from down a penny to up two cents, depending on grade. 

The PP market saw one of its best weeks of 2018: Supply remained tight; demand was stronger; transactions were plentiful; and prices climbed. The PlasticsExchange writes that it continued to see a relatively heavy flow of imported PP and some fresh domestic off-grade railcars offered, as well. CoPP high-flow and HoPP Raffia remain the scarcest of the PP commodity grades and premiums are expanding. Feedstock costs have been rising rapidly over the past six to eight weeks; some of those price hikes already have been passed through on to May PP contracts, but the lion’s share of the upward cost pressure will likely be added in June. The imminent threat of higher prices has buyers scooping up resin as they can, even at these elevated price levels, as actual manufacturing demands need to be filled. In the near term it feels like the market will digest this new price level; the PlasticsExchange advises that participants monitor spot PGP prices and procure resin as needed.

Read the full Market Update on the PlasticsExchange website.