After a volatile start to the year, spot resin trading improved substantially last week, reports the PlasticsExchange (Chicago) in its Market Update. The market was busy throughout the week, both into month end and as March began.
|Image courtesy Cool Design/|
Market activity was inconsistent during the first two months of the year, as supply and demand ebbed and flowed and resin trading took on a feast-or-famine dynamic. There was a better stream of fresh polyethylene (PE) and polypropylene (PP) railcars offered as February drew to a close, and a number of prime high-density PE cars were made available as some processors seem to have fallen short of their forecasted orders. PP prices stayed steady, as monomer firmed and a fresh price increase was announced for April.
The PE market was more active, there was better demand for film-grade resins and gains of at least a cent were seen in all high molecular weight, low-density and linear-low-density PE for film, where spot supplies have been sporadic. High-density PE for blowmolding is still snug, while HD injection remains the most abundant of the PE commodity grades, and has been priced at a nice discount. PE producers are leveraging previous supply disruptions, while maintaining heavy direct exports, to keep supply/demand fundamentals shaded bullish, hoping to add to the February $0.04/lb increase as there is another $0.03/lb on the table for March. Processors remain hopeful that new production will start to become more visible and help put a cap on pricing.
PP trading was good, perhaps even a tad above average. With propylene monomer prices collapsing in February, buyers and sellers of PP have developed widely varying price expectations. Processors have clearly backed away from the market, seeking minimal supply to fill in gaps while they wait for prices to fall further. However, not all grades are easily sourced, so material with immediate availability still commands a healthy price.
Even as producers have throttled back production to keep supply balanced to tight, new railcars have begun appearing at lower levels targeting new March pricing. On the other hand, as costs fall, at least one major producer is looking to de-couple PP resin from PGP monomer (again). It has issued a $0.05/lb margin increase for April, hoping to lower resin prices to a lesser degree than the drop in feedstock costs.
Read the full Market Update on the PlasticsExchange website.