Weekly resin report: Relentless downward pressure on spot PE pricing continues

Mid-November in the spot resin markets was characterized by aggressive discounting, as the vast majority of polyethylene (PE) and polypropylene (PP) grades lost $0.01/lb in a continuation of the downdraft in pricing. Completed volumes at the PlasticsExchange (Chicago) trading desk were above average last week, driven by better buying from PP processors, who enjoyed the savings, reports the resin clearinghouse in its weekly Market Update. PE buyers were more cautious, however, and again generally chose to procure minimum quantities, often just single truckloads.

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Still, sellers aspired to reduce their inventory positions in an effort to clean up year-end books and made it worth a buyer’s while to procure in size. Some savvy buyers who were willing to bid aggressively for larger quantities found tremendous deals and achieved extra value, said the PlasticsExchange, which expects PE contracts to be flat, at best, and perhaps lose ground.

PP contracts will imminently see a decrease this month, currently estimated at $0.04/lb. Export volumes continue to astound, maintaining heavy congestion around the Houston area packaging facilities. Logistics will no doubt tighten up with Thanksgiving week approaching. If you have been waiting to make a purchase, get your orders in now to secure continuity of supply, recommends the PlasticsExchange.

The spot PE market continued to transact at a steady rate amid relentless pressure on prices. A glut of fresh railcars continued to flood both the domestic and export markets, bringing good availability for most grades, while also scaring away some buyers. All PE commodity grades slid another cent, except for weak linear-low-density PE film, which dropped a deuce. Even those materials that were not abundant continued to be pulled lower by the overall momentum.

Despite the weakness in spot pricing, there is still a $0.04/lb increase nominated for November, but the PlasticsExchange sees very little chance of it getting pushed through barring a significant outside event. Processors are getting vocal with their desire to see the $0.03/lb September increase peeled off before year-end, but as we have seen time and again, producers will fight to keep their hard-earned increases. The export market remained very active: Its ability to consume large slugs of material has producers’ attention, as they chase bids to move material, which brought new low prices for this cycle, reports the PlasticsExchange.

Spot PP trading was strong, the flow of fresh railcars was very good and prices for homo- and co-polymer PP dropped another penny. Availability and completed volumes continued to favor co-polymer PP, although homo-polymer PP also achieved solid volumes this past week. Lower monomer costs will translate into a moderate decrease in November PP contracts; seeing the writing on the wall, suppliers have been aggressively discounting as they try to move more material. Processors welcomed this recent downturn in prices and were eager to secure both prime and off-grade material at favorable levels. The reseller community also seems to be keeping smaller amounts of uncommitted inventory on hand, creating a premium for packaged resin ready to ship.

Read the full Market Update on the PlasticsExchange website.

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