Weekly resin report: Prices continue to slip in spot PE and PP markets

Bucking tradition, the spot resin market saw good activity for the first week of a month, which is generally the slowest, reports the PlasticsExchange (Chicago) in its Market Update. A steady stream of both resin requests and offers surfaced the first week of May, with all commodity grades well represented. Buyers and sellers apparently came to play, as most realistic transactions were driven to conclusion. Spot prices for both polyethylene (PE) and polypropylene (PP) remained pressured and prices slipped. The lone exception was HDPE for injection, which continues to defy gravity and move higher because of its rare scarcity in the secondary market. Resin exports, which began to increase partly helped by the weaker dollar, are again facing headwinds as crude oil and international resin prices dip. 

Spot PE offers were generally priced lower, which was welcomed by processors who have been working down their inventories and are in need of material. LDPE and LLDPE film grades dropped another penny and HDPE for blowmolding shed a half-cent, while all injection grades remained snug and were firmly priced. PE contracts rose $0.08/lb during the first quarter and were flat in April. Although producers are again seeking to implement the final $0.03/lb price increase that is still on the table, market conditions make that unlikely, according to the PlasticsExchange. 

With resin reactors returning from maintenance and upstream supplies building, producers have again begun targeting the export market in larger numbers to supplement sales and draw down inventories. However, crude oil prices just reached a low level not seen in six months, accelerating the negative sentiment in the international resin market. As such, Houston prices have been dropping to chase exporters’ bids, which continue to slide. The growing discount that resin in Houston holds to the domestic market is becoming too wide to be sustained. If the trend continues, buyers will be calling for relief and domestic contracts in May will be flat at best. 

Spot PP trading improved somewhat, writes the PlasticsExchange, as buyers picked away at well-priced offers, but generally in lower volumes. It’s déjà vu all over again: Fresh off-grade railcars were generally priced beginning with a 4 and resellers with uncommitted inventory were eager to sell their resin and entertained reasonable bids, even if they caused a loss. However, some overly enthusiastic processors brought unrealistic low-ball opportunities that did not even generate a counter offer. Prime HoPP resin is generally still priced in the $0.50s/lb, while premium resins like CoPP No Break and PP Random Clarified still start with a 6. As another sizable PP contract decrease is imminent for May, prime, off-grade and export levels are all set to head further south. 

Read the full Market Update on the PlasticsExchange website.