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Weekly Resin Report: Spot PE, PP Prices Spiral Higher

TAGS: Materials
Image: Peshkov/Adobe Stock weekly resin report stock image
Processors flocked to the spot resin market seeking material last week, but demand outstripped supply, causing prices to spike.

Processors, many of whom were caught short of supply, flocked to the spot resin market last week seeking material, but demand continued to outstrip current resin availability. Consequently, prices for both polyethylene (PE) and polypropylene (PP) continued to spiral higher, driven by ongoing production issues, rapidly rising feedstock costs, export demand, and domestic price increase pressures, reports the PlasticsExchange in its Market Update.

Few Prime railcars were spotted, although a steady trickle of off-grade cars passed through. Resellers doled out limited Prime offerings from warehoused stocks; as material sold, they raised prices on new offerings. “Though we cringed to ask for the ever-rising offering prices,” writes the PlasticsExchange, “if the right resin was found, transactions came together with relative ease.”

Given strengthening market conditions, PE producers found renewed optimism in implementing their $0.05/lb price increase in December. PP buyers will endure a double-digit, mostly cost-push contract price hike this month, reminiscent of the volatility of past years. Toward the end of the week, with few pounds even available, exporters began to resist new lofty asking prices, indicating a limit to affordable levels, at least for now, according to the PlasticsExchange. 

The PE market exploded last week, as demand chased limited supply and drove prices higher. Spot prices at the PlasticsExchange trading desk jumped another $0.01 to 0.02/lb, adding to the previous week’s gains. That brought the two-week total to $0.02 to 0.04/lb, depending on grade, which is a very large jump for early December. The market was generally surprised by the quick reversal back toward higher prices, driven by super-hot Asian demand and production disruptions, particularly affecting high- and low-density PE. Many domestic buyers had expected deep December discounts, which never materialized. Instead, they reluctantly paid the price needed to restock their resin coffers and carry them through the new year.

As noted, Asian resin buyers have been very aggressive, even jumping their bids above domestic asking prices, seemingly scooping up all they could secure. This not only provided producers with large incremental demand, but also a higher netback than many domestic selling opportunities. The shift in market conditions emboldened producers to firmly seek their $0.05/lb increase in December, which had seemed unlikely just a few weeks ago.

The run on inventory stocks has pushed out lead times; consequently, the PlasticsExchange urges buyers to plan ahead and procure material, as needed. Spot resin prices will probably rise even higher before they ease again. 

Skyrocketing feedstock costs push PP resin contract prices higher.

PP trading was extraordinarily strong. Prices continued their unabated ascent, as buyers clamored to secure practically every reasonable offer that was presented, reports the PlasticsExchange.

Basic commodity homo- and co-polymer PP grades, such as low- and mid-melts, continued to make their way through the spot market, while most premium grades, such as high flow, Random Clarified, and No Breaks, remained super scarce. The PP market, which has dealt with historically low inventories for months, found a renewed catalyst in recent weeks from skyrocketing feedstock costs, as PGP tacked on yet another $0.035/lb this past week, pointing to a huge and imminent price for December monomer and resin contracts. Before the week was over, spot PP prices added another nickel, quickly marking $0.08/lb of gains in just two weeks; spot PGP has risen $0.11/lb during the same period.

November data is showing another strong month of both production and domestic demand. Export sales were average, but weren't really needed to boost sales, as domestic demand took care of most of the available supply, writes the PlasticsExchange. There was a very small upstream inventory build for the first time in six months. From its past 24-month peak to present, PP inventories are down about 42%. Late in the week, a major producer issued an update to its force majeure, extending allocations through December and into January.

Read the full Market Update on the PlasticsExchange website.

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