Spot resin trading volumes eased back last week from the frantic pace seen during most of February, but the total tally was still above average, reports the PlasticsExchange (Chicago) in its weekly Market Update. Buyers continued to scoop up favorable polyethylene (PE) offers, while polypropylene (PP) processors only picked away as needed.
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Commodity PE resins gained a half-cent across the board, and asking prices began March about a penny higher. Spot PP pricing continued to slide; the February decrease was deemed too light, thus maintaining the negative bias into March. Exports for both PE and now PP have been impressive, and Houston warehouses remain nearly full, with packaging delays still seen.
Sourcing was slightly tougher in the spot PE market toward the end of the week, which saw the calendar change to March. Suppliers at a minimum held firm on their pricing and, in many cases, ratcheted levels up a penny or so. That was enough to support a half-cent rise across the board of all spot PE commodity grades. Over the course of this bear run, several attempts have been made to bottom out the PE market and bolster prices, so time will tell if this little bit of traction will take hold in March, writes the PlasticsExchange. February contracts rolled flat. There is another attempt to implement a price increase in March, which now seems to average around $0.03/lb, but can it stick?
Spot PE prices fell heavily over the past six months, while contracts simply have not. Large discounts continue to be provided for fresh spot railcars, and the PlasticsExchange believes that the gap eventually will need to shrink. A quick correction is not clearly imminent, however, as spot prices have failed to rally. Meanwhile, wrestling additional decreases out of producers has proven difficult. Processors often are opting to supplement their minimal contract commitments with spot purchases.
PP trading again was average at best. A normal flow of off-grade resin, along with occasional well-priced prime railcars, has been the norm. Spot demand remained soft, as processors anticipate another decrease for March; the $0.015/lb decline in February contracts left something more to be desired, according to the PlasticsExchange. For the third week in a row, prices for both homo- and co-polymer PP slid another penny. Prices are slowly eroding, playing catch up (or down) with lower PGP levels. Still, PP prices have come down dramatically the past several months, and processors are enjoying the savings.
With market sentiment still negative, we have yet to see a major restocking effort ensue, notes the PlasticsExchange. Domestic demand in January was actually down about 2% compared to the fourth quarter. Even though exports more than doubled to about 3% of total PP sales, 42 million pounds is not enough to soak up surplus supplies, which have grown for three solid months. Upstream resin inventories have reached their highest level since December 2017.
Read the full Market Update on the PlasticsExchange website.