Activity in the spot resin markets slowed down the final week of August, though there were some good spurts that helped solidify a strong month in terms of trading and volume, reports the PlasticsExchange (Chicago) in its Market Update. There was a good flow of month-end resin offers, but activity dried up on Friday, Aug. 31, as many market participants took early leave for an extended holiday weekend.
|Image courtesy Cool Design/
Several grades of polyethylene (PE) firmed up a half-cent or so, as the cheapest part of the Prime market in Houston cleaned up as offers sold. A level of uncertainty remains with regard to August PE contracts—there could be occasions where some contracts remain flat while others that are tied to an index could realize a decrease. Polypropylene (PP) contracts averaged a $0.02/lb increase in line with the same hike in feedstock costs.
Spot PE activity subsided as the month drew to a close, a contrast to an overall exciting month that saw declining resin prices and high volume turnover. Most PE grades recouped a half-cent this past week, but still ended the month moderately in the red. Spot levels during August fell $0.03/lb on average, with minor variations by grade. The slide began when exporters started shedding material during the first half of the month as the Chinese tariffs appeared imminent. Domestic buyers, sensing a little bloodshed, backed away from the market awaiting better availability and cheaper prices. Indeed, nicely discounted railcars were then seen as the tariffs were implemented on Aug. 23. Buyers were there, ready to scoop up the deals.
Despite the break in spot prices, and the growing discount compared to contracts, producers appeared firm to hold August contracts flat. They reiterated their intent to increase September contracts by $0.03/lb, déjà vu all over again, as they have tried to do this for several months. Although there is ample supply of most PE grades, the PlasticsExchange said that it recognizes value at these discounted prices and has been making choice buys, rebuilding its PE inventory. As the industry enters a seasonally strong period of demand—the possibility of a weather situation developing in the Gulf is on the rise and the initial shock of the tariffs has waned—PlasticsExchange analysts feel that currently there is more potential upside than downside risk in spot PE.
PP trading was average this past week. Transacted volumes were equally distributed between homopolymer (HoPP) and copolymer (CoPP) resins, and prices were flat. There was a consistent flow of good, and sometimes rough, off-grade railcars with nice discounts available in Houston. Spot PP prices at the PlasticsExchange slowly edged $0.02/lb higher over the course of August, and this past week, the trading desk noted that PGP and PP contracts settled up a commensurate $0.02/lb. If softer spot monomer prices persist, PP levels could weaken a tad in September. HoPP Raffia and CoPP No Break and Clarified grades remain tight in the market and continue to command a premium, when available. That said, CoPP supply could start to increase, as Total lifted the force majeure, declared in early June, on CoPP products from its La Porte, TX, facility.
Read the full Market Update on the PlasticsExchange website.