Weekly resin report: Spot PE market finds its groove

The spot resin markets were very busy last week: Demand was strong, and while supply was available, it was not simply free flowing, reports the PlasticsExchange (Chicago) in its Market Update.

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Most fresh prime polyethylene (PE) offers were priced two to three cents higher than they were in late September. While off-grade material was more plentiful, it was still priced up by one to two cents. With the September $0.03/lb PE increase intact, producers have been maintaining some upward pressure on the market. However, they have not pushed to advance the extra $0.04/lb increase, which is on the table for October.

Polypropylene (PP) trading was good, but off its recent pace. Spot PP prices moved up a cent on tighter supplies but remain a relative bargain compared with higher priced contracts, according to the PlasticsExchange. The export market remains hot and Houston packaging facilities are still congested.

The spot PE market seemed to find its groove as the pace ramped up again in October. The PlasticsExchange reports that its trading desk was busy throughout the week, filling a consistent flow of resin requests and finding homes for well-priced supplier offers.

There has been a run on LDPE Clarity, which has seen its premium again expand over other film grades; HDPE blow molding has also caught a bid, driven by better demand and lack of spot supply. While there is plenty of material available for those willing to wait two weeks for fresh railcars to arrive, prime material for immediate pickup can often be a challenge to secure, as resellers seem to be limiting their uncommitted inventory kept on hand.

Processors are recognizing the reality of the enabled $0.03/lb September contract price increase, and the PlasticsExchange said in its weekly report that it finally saw spot prices firm up a penny midweek. If prices continue to creep higher along with some sort of supply disruption or sustained bullish fundamental, the next $0.04/lb increase could also prove viable. The wild card could be the escalation of Middle East tensions, as an Iranian oil tanker was apparently attacked on Friday. The crude markets once again shrugged off this news and it’s not clear whether these smaller dustups will have a lasting effect. Settling the trade dispute with China and lifting of sanctions would also be a boon to the markets, and while there have been signs of light, a full agreement remains elusive.

PP trading relaxed a tad, but activity was still solid, according to the PlasticsExchange. Processors were out seeking spot railcars while resellers secured packaged truckloads to satisfy prompt customer needs. Co-polymer PP changed hands more frequently than homo-polymer PP; given favorable pricing, buyers seemed pleased to procure off-grade over prime. Railcar offers were less abundant than previous weeks and as a result of the tighter supply, prices for both homo- and co-polymer PP increased a penny.

While PP production has essentially remained on par, exports have continued to grow. Monthly offshore shipments are often running twice year-ago levels or more and have been soaking up surplus material. It seems that an increase in exports has been targeted as a larger sales channel, perhaps in anticipation of new planned production slated to come online over the next year. PP contracts followed monomer up a penny in September and could give it back in October; either way, barring a supply upset, low volatility in contract pricing is anticipated.

Read the full Market Update on the PlasticsExchange website.

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