Polyethylene (PE) prices eased a cent last week, a small yet notable retreat from the average $0.19/lb gains garnered during the previous four months. The PE market is still categorically tight, but the rally seems to be running its course, raising some doubt that the current $0.05/lb increase nominated for October will bear fruit, reports the PlasticsExchange in its Market Update. Meanwhile, the polypropylene (PP) market still has legs and prices were flat to another penny higher, though it too is facing resistance to ever-rising prices and showing signs of exhaustion. Export interest was better this past week, as many inquiries flowed from Latin America, Europe, and Africa. The relatively high Houston price works for some regions on smaller volumes, but has shut down high-volume incremental dealings, said the PlasticsExchange. 

The spot PE market had a surprisingly slow week on the heels of the rather benign Hurricane Delta. Completed volumes at the PlasticsExchange trading desk fell short of average, as buyers retreated from the market, breaking from the frantic rate that has been sustained for two solid months. Slack demand and signs of improving supplies sent spot PE prices back a cent, marking the first weekly decrease since the end of April. Spot availability improved a bit, but some grades were still absent from the market, such as linear-low-density PE high-flow and roto-molding materials. Other grades were just snug, like the slate of high-density PE blow-molding grades. The PlasticsExchange reports seeing better supplies of high-density PE for injection, linear-low-density PE, and low-density PE film grades begin to develop.

The market is far from loose for any PE resin and this does not necessarily mean that pricing will erode, cautions the PlasticsExchange, but after $0.19/lb increases in just four months, the market is getting tired. There is still a $0.05/lb increase on the table for October, but analysts at the resin clearinghouse do not see significant traction toward implementation.

Buyers limit PP demand to filling short-term needs

PP trading slowed as spot supplies remained scarce. Given the price, buyers limited their demand to filling short-term requirements. Co-polymer PP resins were very hard to come by; occasionally, off-grade railcars were offered and then bid out of reach except for those who were clearly in absolute need of material. Co-polymer PP benchmark prices trudged another cent higher, while homo-polymer PP resins held flat but firm, as they have been somewhat more available and not quite earned the same pricing support. As new and off-line reactors return from maintenance, low-flow homo-polymer resins are generally produced during start-up periods before higher flow and co-polymer materials are made. The spread between co-polymer and homo-polymer PP has widened further to a full $0.05/lb, and co-polymer PP imports that are still on the water already seem to have been snatched up.

Spot PP prices have soared well beyond contract levels, which are largely correlated to PGP monomer levels that have been relatively stable. Producers have been able to capture some of this momentum and leverage the supply/demand imbalance to expand contract margins a bit, though a major producer curiously pushed off its October increase effort until November. Buyers remain hopeful that this upward pricing pressure will subside during the fourth quarter, but, for now, these lofty levels remain.

Read the full Market Update on the PlasticsExchange website.