Weekly resin report: Prices weaken for most PE grades and PP

Spot resin trading was very good last week, though it could not be considered great, reports the PlasticsExchange (Chicago) in its Market Update. There was a fairly consistent flow of market activity, but completed volumes were only about average. Most grades of polyethylene (PE) weakened as much as a penny; polypropylene (PP) prices fell a bit more. While PE producers are again attempting to implement their final $0.03/lb price increase, which is still on the table, few participants believe that further price advancement is realistic. PP contracts will follow PGP monomer contracts sharply lower in May. 

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The spot PE market retreated again, as supplies continued to grow. Resellers sought to unload uncommitted inventories while buyers just picked away at the more attractive offerings, according to the PlasticsExchange. Domestic railcars were available with discounts, casting further doubt on the likelihood of the $0.03/lb increase taking hold in May. HDPE for injection was the lone commodity resin to buck the downward trend, with another half-cent uptick, bringing steep premiums of nearly a dime versus other HD grades. PE prices in the Houston area slid again, as producers chased high-volume bids amid still softening international markets. Exporters’ cupboards have thinned, as they have mostly been seeking back-to-back transactions. 

Spot PP transactions were light, even though the flow of fresh railcars was heavy and nicely discounted. Prices for both HoPP and CoPP dropped at least a penny, and rough off-grade was the weakest of the group. There was a large range of pricing based on quality and timing; buyers’ and sellers’ pricing ideas were at times very far apart. As we often see in falling markets, some buyers that have depleted their inventories wish to procure packaged resin for immediate shipment at cheap railcar pricing that is still 10 to 14 days from delivery, writes the PlasticsExchange in its weekly update. Suppliers with inventory on hand generally wish to be rewarded for stocking resin, despite material with lower replacement costs en route. Sometimes it’s down to a game of who blinks first. 

During the first quarter, PP contracts marched $0.205/lb higher, essentially locked in step with soaring PGP costs. Now that monomer prices have unraveled, resin buyers are seeking a series of aggressive contract price decreases. April PGP contracts were down $0.06/lb and May just settled down $0.075/lb, so logically, a $0.135/lb two-month decrease should come through for PP. Spot resin prices did not rally as much as contracts, so while spot Gen Prime PP has been sliding, the decline has also been more mild. Spot monomer seems to have stabilized in the mid-$0.30s/lb, but remains pressured. While there could be additional relief coming in June, at this point, another $0.07/lb decrease to completely wipe away the first quarter increase seems like a very tall order, but a lot can change by next month.

Read the full Market Update on the PlasticsExchange website.

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