Spot polyethylene (PE) prices were steady to a penny lower last week, while polypropylene (PP) prices firmed a cent based on higher propylene monomer costs, reports the PlasticsExchange in its Market Update.

Demand understandably has been on the sluggish side, as many nonessential manufacturing facilities remained temporarily closed because of the pandemic, while other processors’ spot resin needs might have been easily filled by their normal channel suppliers with surplus inventory to sell, writes the PlasticsExchange. International trade continues to flow, and the Houston grid remains open, although currency and energy/feedstock fluctuations, depending on the nations involved, will keep workable prices volatile.

Pandemic conditions did not deter producers from running their PE and PP reactors hard in March. While continued strong sales, both domestic and export, absorbed most of the production, upstream PE inventories swelled for the fifth straight month. PP inventories also increased, but remain near record low levels. It will be interesting to see if producers can continue to find homes for all of the fresh material or if the worldwide economic slowdown will have a meaningful effect and lead to tempered resin production, notes the PlasticsExchange. April PE contracts could potentially find some relief; PP contracts were initially pointing lower along with monomer and now indicate closer to flat.

In the spot PE market, prices have been easing, but not cratering. While transacted volumes at the PlasticsExchange trading desk were still off from the heavy turnover seen during the first quarter, this past week brought a fresh breath of optimism, as financial markets continued to recover and one could start to glimpse a light at the end of the coronavirus tunnel.

The resin clearinghouse says it was able to complete a fair number of PE transactions, mostly in truckload quantities, as processors exercise caution, not ordering more than what can be predictably processed and sold. Resellers have been working down their inventories in delicate fashion as most have higher priced stock on hand. Remember, the PE markets were in an upswing before the sudden shift, which left many traders and brokers still zigging while the market already started zagging. For now, prices are slowly moving lower for some grades: High-density blow and injection each lost a penny along with linear-low-density PE injection, which had previously been extremely tight. The remaining commodity grades were priced flat this past week. As more of the middle market’s older inventory is cleared and positions are reestablished at new lower levels, the price decline might continue. There are no contract price increases currently being pushed and the downstream call for price relief is expected to intensify.

Last week’s PP trading was a little slower, as material availability increased and both homo- and co-polymer PP prices actually gained a penny for the first time in six weeks. Although improved, most additional supply was in the form of fresh railcars to ship, whereas buyers generally were looking for spot truckloads, which were difficult to source and often met with a price disconnect.

With energy and feedstock prices down substantially over the past couple of months, resin buyers have been seeking lower prices, while suppliers, knowing the tightness of spot supplies, have been reluctant to budge. Of the completed deals, volume was evenly split between co- and homo-polymer PP, and prime outsold wide spec. Rebounding monomer costs will limit the April price decrease, although modest easing could still materialize.

Read the full Market Update on the PlasticsExchange website.