As the calendar flipped to October, the spot resin markets were off to the races! It was a surprisingly busy start to the fourth quarter, which had every right to be quiet given the lack of fresh offers and a $0.02 to 0.04/lb polyethylene (PE) price increase on the table, reports the PlasticsExchange (Chicago) in its Market Update. Demand remained robust, however, particularly among the reseller community, as sentiment has turned moderately bullish, and the buying continued. Processors were also back in the market and not afraid to pay a penny higher than in the previous week.
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Polypropylene (PP) activity was a bit sporadic, both on the supply and demand side, and transactions were conducted amid a huge range of prices—anywhere from the mid-$0.60s per pound for off-grade homopolymer (HoPP0 in Houston to the mid- to high-$0.80s per pound for domestic Prime copolymer (CoPP). Exports continued to flow, helped along by ever-rising oil prices, which are supportive of international PE and PP levels.
The spot PE market started October with above average activity and higher prices. High-density (HD) PE injection grades led the way, recovering $0.015/lb. Other HDPE as well as low-density PE and linear-low-density PE film grades also added about a cent. The PlasticsExchange trading desk was busy all week: Transaction volumes were once again strong as buyers, especially other resellers, continued to aggressively procure material. Processors were less enthusiastic, which is not unusual, as traders tend to react first to cycle shifts before bullish sentiment trickles downstream, writes the PlasticsExchange. The buying surge began several weeks ago, as deeply discounted prices appeared too compelling to pass up. Even as the lowest prime offers had been scooped up, buyers were not deterred by fresh offers priced a penny or two higher. While this might easily translate as a sizable endorsement of the current $0.02 to 0.04/lb price increase, there is still plenty of room for the spot market to rally before equaling current contract prices.
The PP market saw decent activity, but it did not necessarily translate to huge trading volumes. While some sizable deals were reached, a majority of orders went unfilled as supply and demand were often mismatched either by price or quality. Higher flow HoPP and CoPP, which had been amply available, became scarcer. While the spot PP market was initially marked down a penny early in the week, based on softer monomer costs, the lack of well-priced spot PP resin helped pull the market back to flat by Friday, according to the PlasticsExchange. PP imports continue to flow into the United States, most of which are pre-sold before the resin hits the shores. Still, the imports, which can be 100 million pounds per month or more, has helped to fill in gaps, especially as production disruptions affect already tight domestic supplies. The PlasticsExchange expects little change in October PP contracts, which may soften by a penny.
Read the full Market Update on the PlasticsExchange website.