Spot resin trading was fairly steady last week, reports the PlasticsExchange (Chicago) in its Market Update. There was a consistent flow of polyethylene (PE) resin, both prime and off grade, as prices continued to shed more of their hefty storm-related premiums. With peak pricing already behind us, processors are limiting their purchases at still-elevated levels, procuring only as needed and working down inventories. With a down cycle seemingly at hand, resellers are mostly seeking to liquidate their uncommitted warehoused materials, while preferring back-to-back deals for new business. 

Spot PE trading completed volumes were just a tad above average, though deals were getting increasingly harder to close. There was a healthy flow of resin requests, but it seemed that many were just probing the market for levels, checking to see how soft prices were getting. The PlasticsExchange reports seeing a trend of early morning requests, some mid-day negotiating and finally purchase orders arriving late in the day. This type of activity is quite a change from six to eight weeks ago, when availability trumped price and buyers grabbed offers immediately. 

PE prices continue to slide back from post-storm highs, and HDPE resins, which scored the largest premiums, have been unwinding the most. LDPE for film and injection has also seen significant pressure, while LLDPE for both film and injection remains somewhat snug. Post-Harvey PE exports took it on the chin because of production disruptions and much better domestic netbacks. While Houston levels have been dropping, they are still above the level needed to move large volumes of incremental material. All that new PE production will need to find a home and the domestic market will simply not absorb it all, or even most of it. With crude oil reaching multi-year highs, a rising floor price for international PE must be considered, writes the PlasticsExchange, which could help close the arbitrage gap. 

The polypropylene (PP) market has returned to its more natural state, where availability is sometimes sketchy and is countered by often unenthusiastic demand. Prime PP prices have been mostly flat and nice discounts have been afforded for off grade, particularly rougher material, which has been making its way offshore. There has been a steady stream of prime CoPP imports, especially the harder grades like Random Clarified and No Break resins. Most of these imports seem to be pre-sold, with somewhat small volumes offered in the spot market. PP prices should at least maintain current levels, with some added upward pressure coming from firm to higher PGP costs.

Read the full Market Update on the PlasticsExchange website.