The spot markets remained relatively active, with polypropylene (PP) trading outshining polyethylene (PE) for a change. The heavy flow of resin offers slowed significantly, but not before buyers made off with some super year-end deals. Completed volumes were exceptional, and December should finish as the second best month of the year, according to the PlasticsExchange (Chicago).
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While resin prices have been in a long new-supply-fed down cycle, sentiment has recently been shifting away from bearish: Much of the down move has already been made, crude oil has risen and held above $60/bbl and international trade deals have finally progressed, reports the PlasticsExchange in its Market Update published on Dec. 20.
Spot PE trading slowed from its super-active pace as the market began winding down toward year-end. There was still a small flurry of railcars that came and went, but it seemed that most December business was already on the books. This week’s transactions were concentrated in low-density and linear-low-density PE, both film and injection, while high-density PE resins took a back seat. Spot PE prices at the PlasticsExchange were flat across the board with a firm undertone, as the bottom end of the price spectrum continued to lift.
Several resin producers issued letters announcing a new nickel increase for January PE sales, in addition to the $0.04/lb increase effective for December. The PlasticsExchange does not see the December increase as implemented and, given the large discount that spot holds to contract, a decrease could actually be justified. However, the market has also been shoring up, so perhaps contracts might just sail steady into the sunset. A slow week is expected as much of the industry breaks for the holidays.
PP trading remained robust; in fact, it was among the PlasticsExchange’s busiest weeks of the year. There was good resin availability, well-split between homo- and co-polymer PP, but buyers came in and aggressively scooped up the deeply discounted material, with unfilled demand persisting at week’s end. Buying was diversified and ranged from resellers filling immediate truckload needs to processors picking off holiday-priced railcars. Others lined out weekly deliveries for the next 60 days, and some traders took on positions at these favorable levels. While off-grade resins sold lower before cleaning up late in the week, spot prime prices managed steady. Average December PP contracts will follow PGP down $0.02/lb, with a possible recovery setting up for January.
Read the full Market Update on the PlasticsExchange website.