Weekly resin report: Prices for most polyethylene grades yield to decade-level lows

Transactions remained robust in the spot resin markets last week, although margins were compressed as sellers competed for orders, reports the PlasticsExchange (Chicago) in its Market Update.

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Polyethylene (PE) prices were steady to mostly lower, off-grade railcars were nicely discounted and Generic Prime was available for the asking. July PE contracts should settle flat to down $0.03/lb; in some cases the relief might be seen as a volume rebate or other special benefit.

July polypropylene (PP) contracts should settle up $0.015/lb along with PGP monomer, according to the PlasticsExchange. Early in the month, when monomer was rallying, it seemed that a larger increase could take hold. Spot PP prices were pressured, and while Generic Prime material was somewhat scarce, off grade was plentiful. Houston resin prices are depressed, as export asking prices have been failing to generate incremental offshore demand. There is a lot of material flowing to the warehouses, with the PlasticsExchange reporting that packaging delays have been seen.

Although active, spot PE trading landed slightly below the previous week’s pace. Completed volumes were still above average as numerous railcars and truckloads, primarily loaded with off grade, changed hands through the PlasticsExchange trading desk. Deals were fairly well spread between the commodity grades, with a heavy emphasis on high-density PE. Spot prices were mixed: All film grades held steady while the rest of the slate shed a cent.

The long-term down trend remained intact, as prices for most PE grades yielded to new decade-low levels. There is a good amount of opacity in the contract market, with producers, large processors and major consultancies each indicating a variety of results and estimates for July. Price change talk ranges from the proposed $0.03/lb increase, which will not happen, to simply steady, while many point to a $0.03/lb decrease. It has become increasingly difficult to peg these contract price movements, as discounts are seemingly being awarded to larger buyers in a hushed manner. The gap between contract and spot has grown very wide. In the meantime, producers continue to run their reactors at near-full capacity. While both domestic and export demand have been strong, upstream inventories have swelled to a new record high with additional new production starting up, as well.

The spot PP market continued to transact at an elevated clip: Volumes have been strong all month long while prices have been volatile. Trading activity heavily favored copolymer over homopolymer PP last week; prices slid a penny for both PP groups. The flow of offers was heavy and a steady stream of well-discounted off-grade railcars pelted the marketplace.

Still, processor spot demand was very good and most realistic resin requests were filled. Overall PP demand had been off in June—domestic purchases were 50 million pounds below the 12-month average and exports fell to their lowest level of 2019. Resin reactors still ran at about 90% of capacity. All together, this led to the first upstream inventory build in five months, although supplies are still extremely tight in a historic context.

July PGP contracts are settling up $0.015/lb to $0.38/lb, and the PlasticsExchange expects PP contracts officially to follow suit.

Read the full Market Update on the PlasticsExchange website.

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