Weekly resin report: Spot PE prices tumble by as much as $0.04/lb

The spot resin markets were very busy last week, and polyethylene (PE) prices were heavily pressured as the new tariffs date draws closer. The PlasticsExchange (Chicago) reports in its Market Update that it has seen some exporters act to liquidate their inventories as their large-volume China outlet comes into question. There were some deeply discounted offers, which grabbed the attention of resin buyers that target other regions—they scooped up the initial supply, but more is likely to come.

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On the other hand, polypropylene (PP) prices were firm, as supply and demand is decently balanced and it is not a big export resin. While off grade in Houston remains well-priced compared to prime domestic levels, availability is dwindling.

Producers are again seeking to increase PE prices by $0.03/lb in August, but it is the same increase that has been tried many times before. At least one producer nominated another $0.02/lb for September. Really! As we get deeper into hurricane season, it can’t hurt to at least have the increases on the books, just in case, recommends the PlasticsExchange. 

Polyethylene (PE) trading was brisk, continuing to buck the summer doldrums seen in some past years. Resin availability remained ample, if not leaning toward abundant, and the PlasticsExchange trading desk completed numerous transactions spread among all commodity grades. PE pricing was heavily pressured, as a revised list of retaliatory tariffs levied by the Chinese targeted many of the resins produced by the new PE capacity. Both traders and buyers with cargoes slated for China scrambled to find new homes for material that cannot absorb the 25% premium. Many exporters had previously curtailed shipments to China, while others are in the process of diverting deep-sea cargoes en route. With some Houston warehouses already bulging with material, tripping up a key export channel could prove very problematic. Although high-level negotiations are surely in play, the Aug. 23 enforcement date is approaching—this is getting very real! 

Spot PE prices were beaten up, falling $0.01 to 0.04/lb, depending on grade, and it was easy to make the connection to the current trade war with China. A revision to the targeted resins sent high-density PE injection and high-molecular-weight PE for film tumbling at least $0.03/lb. It is somewhat unclear which specific linear low-density PE resins are included in the list, but the $0.02/lb drop for film grades was evidence enough. Curiously, low-density PE was left off this version; it was previously included. Still, it slid a sympathy cent.

The PlasticsExchange trading desk received many calls from different regions recognizing that special deals and opportunities might ensue. Plenty of interest came from South American, European, and Middle East buyers. Stay tuned as the date approaches, writes the PlasticsExchange, but for now, absent a last minute reprieve, it appears that a major outlet for North American resin will be severely crimped. 

Polypropylene (PP) trading this past week was good, but not great. While asking prices edged up a cent or two, as a price increase looms, transaction prices were only mostly steady. Railcar offers were generally off grade and weighted toward copolymer (CoPP) over homopolymer (HoPP); however, packaged HoPP was more plentiful in Houston. Prime HoPP Raffia remained snugly supplied, if not essentially absent from the market. CoPP No Break and Clarified resins are not easily sourced as spot, and command a large premium. The PlasticsExchange expects a cost-push price increase of around $0.03/lb to take hold for August PP contracts. While it might be tempting to limit purchases at these lofty levels, please remember—hurricanes happen, cautions the PlasticsExchange.

Read the full Market Update on the PlasticsExchange website.

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