A steady flow of buy orders and transactions rolled through the spot resin markets the first week of April, reports the PlasticsExchange (Chicago). Good demand for most grades of polyethylene (PE) and polypropylene (PP), in prime and off grade, came from domestic and international buyers. Fresh railcar offerings were lighter, and spot prices for PE and PP resins rose $0.005 to $0.01/lb. Market sentiment has turned slightly bullish, at least for the short term, notes the PlasticsExchange in its weekly Market Update, musing that it may be the start of a longer trend.
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PE contracts rolled flat again in March, and producers will try to implement their $0.03/lb increase in April. PP contracts followed PGP down $0.03/lb in March and monomer looks mostly steady for April, but production issues, including Total’s force majeure on PP, could support some margin enhancement, at least in the spot market.
The spot PE market began April on an uptick: As the flow of railcar offers slackened, prices continued to firm, adding another $0.005 to $0.01/lb and shrinking the discount to contracts. However, a number of large resellers also made their warehoused inventories available, which aided market liquidity and facilitated an impressive volume of completed deals, especially for the first week of a month, writes the PlasticsExchange. The contract market cleared up its cloudy finish to March; some producers held on to their hope to raise prices $0.03/lb late in the month, but ultimately rolled contracts flat, as appropriate. The average combined $0.06/lb increase will now be sought over April and May. Over the past several months, processors have drawn down their inventories to now light levels, and demand is expected to ramp up as a result. Exports continued to be very active to several international regions. It seems that a trade deal with China appears imminent, which would be bullish for the PE market in the short term, according to the PlasticsExchange.
PP trading was about average, with fresh railcar offers continuing to flow but at a slower pace. Spot supplies seem restricted, no doubt affected by Total’s force majeure on its PP resins. Prices for both homo- and co-polymer PP rose again, adding $0.01/lb as buyers have found value at these levels. Traders were seen adding to their inventories, which had been drawn down as prices fell over the past several months.
Processors have also begun sniffing for deals, as downstream orders seasonally improve. March PP and PGP prices were down $0.03/lb and seem to have stabilized after a steep decline. The PlasticsExchange expects to see PP resin supply/demand balance tightening. A mild level of friendly sentiment for PP prices may be ahead, which has the potential to accelerate to the upside.
Read the full Market Update on the PlasticsExchange website.