|Image courtesy Cool Design/|
Spot resin offerings were heavy and sharper discounts were seen for both polyethylene (PE) and polypropylene (PP) railcars, particularly for off-grade material, reports the PlasticsExchange (Chicago) in its weekly Market Update. Buyers welcomed the cheaper resin and took the opportunity to restock their relatively light inventories. With continued weakness in spot pricing, it would not be surprising to see an industrywide PE contract price decrease finally come through. The pending PP price increase has been fizzling out as propylene costs ease back, but a small uptick probably will still happen, according to the PlasticsExchange.
Spot PE trading continued to transact at a rapid clip, and the PlasticsExchange reports that completed volumes have already surpassed the total June tally. Its trading desk was kept busy as the buying splurge continued, all of which seemingly started when Gulf Storm Barry first became named. Despite the benign scare, heightened activity still persisted, even as spot prices softened at least a cent. Most commodity PE grades set their lowest marks in more than a decade, though low-density PE and and linear-low-density PE for injection have resisted the trend thanks to tighter supplies.
Although a $0.03/lb contract price increase is on the table for July, an official decrease seems more likely for those that did not already receive relief in June. Spot prices are just too weak and discounts are too large to justify an increase at this time, according to the PlasticsExchange, and a $0.03/lb decrease would wipe away the surprise increase that took hold in April.
PP trading was remarkably busy for the third straight week: Transacted volumes remained elevated and Generic Prime prices slid a penny, while deeper discounts were available for off grade. The burgeoning PGP monomer rally already began to unwind and currently supports just a mild increase for July. There was a good flow of fresh prime and off-grade railcars as well as packaged inventory offered in Houston, while warehoused product throughout the rest of the United States was a bit scarce. Both resellers and processors were good buyers this week, some to fill in supply gaps and others to restock inventories at seemingly favorable prices. Export demand from south of the border also began to perk up a little.
Read the full Market Update on the PlasticsExchange website.