Spot resin trading was very good during the second week of April, with completed volumes heavily weighted in favor of polyethylene (PE) over polypropylene (PP). While asking prices for both PE and PP generally moved higher, actual transaction levels were largely flat, according to the PlasticsExchange (Chicago).
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Market sentiment has shifted from neutral to cautiously optimistic, with more opportunity seen for rising prices rather than further weakness. After several months of relaxed buying, domestic demand improved in March and has continued into April. PE exports remained very strong, as opportunities continued to flood the PlasticsExchange trade desk from most global regions. PP exports have been growing, too, representing nearly 4% of sales in March, much of it to Mexico with lower quality shipments destined for the Indian and Asian markets.
Spot PE trading continued to hum along at a healthy pace before an impressive end-of-week session made the week’s totals shine, reported the PlasticsExchange. Although prices were mostly steady, except for some added strength in low-density PE, good demand from both domestic and international buyers supported the PE market’s small gains achieved over the past several weeks. Notwithstanding increased PE production and an upstream inventory build in March, surplus resin offers have diminished. Rising oil prices, which put upward pressure on international feedstock costs, encouraged hefty PE exports in March; offshore sales exceeded 1.35 billion lbs, which represented more than a third of total sales. Domestic demand was better, too, as processors had drawn down on-hand resin supplies for four straight months. PE producers again will seek a $0.03/lb price increase this month and, if successful, pursue an additional price hike come May, before more newly added production begins.
PP trading was a bit slower this past week. While the flow of offers was consistent, asking prices were higher and buyers resisted the increases. In general, transaction levels were flat, as were benchmark prices. The quality of available material was generally off grade, with fewer fresh Generic Prime railcars seen as supplies appear to be tightening. PP contracts decreased $0.03/lb in March, bringing the total relief to $0.245/lb since November. PP demand improved in March, as processors recognized that the string of contract decreases has likely come to an end and began to exhibit restocking behavior.
April will be a transitional month, and it’s possible to see a small price increase take hold. If PGP costs unfold as the forward curve currently suggests, we are now witnessing the start to a new upward trend.
Read the full Market Update on the PlasticsExchange website.
