The spot resin markets remained active as the fourth quarter began, although prices were only steady and there were also moments of silence, reports the PlasticsExchange in its weekly Market Update. Buyers that did engage were serious about doing business—individual transactions were large and completed volumes again ran at record levels. Trading activity remained heavily weighted in polyethylene (PE) over polypropylene (PP), with storm-disrupted materials such as HDPE copolymer and LLDPE film grades in high demand.
|Image courtesy Cool Design/
Producers have now secured price increases for both PE and PP in each of the past two months and they are pursuing further gains in October, according to the PlasticsExchange. Incremental exports are still hobbled by a lack of supply and high prices, but they will improve as production continues to recover. Some prime PE and PP imports have begun to flow to the U.S. to serve unsatisfied demand because of ongoing resin outages and supply-chain issues.
Spot PE prices maintained their elevated level for the third consecutive week, while a high volume of resin continued to change hands. Before reaching a plateau, PE prices had soared an average of $0.14/lb in the three weeks following Hurricane Harvey. Spot prices quickly went from a modest discount to a sizable premium, and contracts are still playing catch up. Since August, PE producers have secured two increases totaling $0.07/lb, and some are looking to extend the gains in mid-October to a full dime, writes the PlasticsExchange.
Before Harvey hit, much of the downstream PE industry was busy reducing inventories in anticipation of three new petrochemical complexes starting up, including resin reactors that had been long in the works. While two new major resin plants have now begun making pellets, the additional material, some of which is specialized, has yet to impact the supply shortfall resulting from the storm.
Spot PP trading felt rather average: There was a moderate flow of both supply and orders, while prices held their heightened range. The market seems to be entering a somewhat familiar environment where prices are elevated mostly because of rising costs, but supplies are also tight, so margins are increasing, as well. There is also constant, albeit light and lackluster, underlying demand, and when the needed material is sourced, the supply is appreciated more than the price. Spot PP prices remain about $0.15/lb higher than pre-hurricane levels; contracts advanced $0.10/lb during August and September, and they are poised to add a few cents more in October.
Read the full Market Update on the PlasticsExchange website.