Weekly resin report: Spot PE prices slide as suppliers compete for orders

Prices for both polyethylene (PE) and polypropylene (PP)  weakened across the board last week, reports the PlasticsExchange (Chicago) in its Market Update. PE grades dropped $0.005 to 0.015/lb, although some materials such as low-density (LD) PE for film and high-density (HD) PE for dairy remained a tad snug. Spot PP prices dropped a deuce on weaker feedstock costs. There were some phenomenal resin deals presented to us, writes the PlasticsExchange, which it scooped up, because they were “just too compelling to pass up.”

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Despite the $0.04/lb PE increase on the table for November, contracts are expected to be steady, at best. Spot PGP prices have been falling again and if the trend sustains, November PP contracts will see a moderate decrease. Houston PE and PP prices eased as suppliers chased falling bids in order to maintain the high volume of exports required to keep overly burdensome resin inventories from developing as reactors run near capacity. Additional units are still slated to come on stream.

Domestic demand was lackluster in the spot PE trading market, as buyers were reluctant to submit sizable orders. This has been the pattern for a few weeks now, notes the PlasticsExchange, as buyers seemingly source near-term needs while still considering their desire for minimal year-end inventories. Prices slid as suppliers competed for orders, which led to another week of compressed margins. On the other side of the coin, special buys can be found as traders have also been thinning their inventories. Deep discounts are available to those willing to buy in large volumes (i.e., multiple railcars).

Spot PE prices dropped a penny, on average, at the PlasticsExchange trading desk, with some variance depending on grade. HDPE for injection led the way lower, which also dragged film grades down about a half-cent despite being somewhat tightly supplied for immediate shipment. The hurricane season huffed and puffed early on, but seems to be winding down without much of a whimper. Given the current state of the market, the November $0.04/lb increase is now doubtful and it might even be a challenge to keep the September $0.03/lb increase intact through the end of the year, reports the PlasticsExchange. However, it again appears that we could be nearing the end of the trade war with China; should it find a positive resolution, a sizable boost in both demand and prices is to be expected. The added boost would be welcomed, as this Thanksgiving holiday shortened month could use a burst of energy.

PP trading picked up this week as a multitude of truckload (and some railcar) transactions were completed in Houston and around the country. Overall resin availability was good and most materials could be sourced for immediate shipment. Weaker feedstock costs are pointing to lower November resin contracts, and suppliers got ahead of the game by offering cheaper spot PP prices—down about two cents—which spurred better buying. PP co-polymer demand continued to outshine homo-polymer, and this past week, processors opted for sharply discounted off grade over pricier prime resins. As prices drop, U.S. PP is becoming more competitive on the world market and exports continue to grow. PP export volumes are not nearly at the levels seen for PE, but, indeed, a larger percentage of sales have been selling off shore.

Read the full Market Update on the PlasticsExchange website.

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