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Weekly resin report: Polypropylene trading picks up

Article-Weekly resin report: Polypropylene trading picks up

Weekly resin report: Polypropylene trading picks up
With prices already off around $0.20/lb these past four months, some processors are starting to buy more than they currently need.

Prices for both polyethylene (PE) and polypropylene (PP) were flat across the board during the first full week of March. The flow of fresh offers was a bit lighter than it had been, and some grades were seemingly scarce for immediate shipment, reports the PlasticsExchange in its weekly Market Update.

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Sales were equally spread between PE and PP, and total railcar volumes outstripped truckload orders. While the export business continued to thrive, domestic business was front and center. PE producers are again pursuing their $0.06/lb price increase with a split implementation, averaging $0.03/lb this month, but it doesn't look like they will be successful, according to the PlasticsExchange. PP contracts will follow propylene monomer lower in March; a decrease of around $0.03/lb is anticipated.

Spot PE trading felt a bit slower last week. While deal flow was indeed reduced, completed volumes still managed about average, said the PlasticsExchange. Transactions were done in each of the commodity grades, except for high molecular weight for film. Perhaps plastic bag bans are really starting to affect demand? Prices were flat across the board and overall sentiment can be classified as neutral. There is a tinge of firmness in the short term, as trader inventories have thinned out with concern that another wave of resin from new production could weigh on the market.

In the meantime, asking prices for immediate shipment remain a little higher, with some grades elusive in large volume. Producers are again technically pushing for a price increase, which averages around $0.03/lb for March and in total $0.06/lb over the next two months. Implementation appears unlikely in March, as spot material is available at nice discounts to general contract levels. Export activity was a little quieter, but is still very healthy overall and an important component of total demand current and ongoing.

PP trading was much improved. Completed volumes increased substantially and spot prices stopped sliding for a change. Larger transactions were concentrated in homo-polymer PP, while co-polymer PP only garnered demand in truckloads. Although there were cases of deeper discounts for multiple railcars, overall prices held steady. With prices already off around $0.20/lb these past four months, some processors are starting to buy more than they currently need. With demand improving, supply a tad tighter, a likely $0.03/lb decrease for March PGP and PP contracts, and a contango feedstock curve, the PlasticsExchange said that it is shifting its sentiment from still bearish to neutral. It is keeping a keen eye on monomer prices for the next move.

Read the full Market Update on the PlasticsExchange website.

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