Weekly resin report: Spot PE resin offers good buying opportunities

October got off to a slow start in the spot resin markets, but activity did creep up as the week wore on, reports the PlasticsExchange (Chicago) in its Market Update. While spot liquidity generally remained ample, fresh resin offers were on the lighter side as suppliers sought to edge spot prices higher.

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Polyethylene (PE) producers and the major consultancies acted with belief that the September $0.03/lb price increase has been implemented. However, even with several bits of bullish influences, spot levels really had not jumped much, making spot PE resin offers a good buying opportunity and contributing to stronger demand late in the week. The PlasticsExchange expects heightened interest in spot resin to persist as long as the deeply discounted material remains available.

Polypropylene (PP) contracts were up a cent in September along with PGP monomer contracts, and current indications point to minimal change for October. Fresh PP offers flowed, but prime was priced higher and great deals were fairly sparse after a strong sales push at the end of last month. This helped to shore up the lower end of the pricing spectrum, but not enough to move official pricing at the resin clearinghouse. Despite weaker crude prices, trade wars and general economic anxiety, resin exports remain strong and continue to grow as suppliers target offshore accounts as a significant outlet for expanding U.S. production.

The spot PE market eased into October in a muted fashion, as participants digested the $0.03/lb contract price increase, which appears to have taken hold. Individual transactions favored single truckloads and railcars, instead of multiples, which indicated caution on the buy side. Completed volumes fell below the recent average at the PlasticsExchange trading desk. While many asking prices initially were propped up, processors resisted and suppliers generally acquiesced to deal at recent levels. All in all, spot prices were flat, although some film grades remained difficult to source, such as linear-low-density PE octene and metallocene and low-density PE Clarity. With the September $0.03/lb contract price increase seemingly intact, and no major storm on the horizon, producers reduced their October increase from $0.08/lb to $0.04/lb. It’s worth keeping an eye on ethylene prices again, recommends the PlasticsExchange, which were fairly irrelevant the past several years while polyethylene production margins were very wide. With PE prices hovering at decade lows and monomer costs running up, margins have been squeezed to the point that incremental resin production actually needs to be considered. October will be an interesting start to the fourth quarter and will give us a clue on how the year might end.

PP trading began October fairly swiftly—the low end of the price range snugged up and transacted volumes were solid, every bit of the elevated average that we have seen over the past several months, reports the PlasticsExchange. A moderate flow of fresh railcar offers moved through, the majority of which were prime and priced too high to transact; good off grade priced at market levels found willing buyers, however. Several big swathes of packaged material provided good market liquidity and large volumes of this changed hands at familiar levels. While there is some play between supply and demand to help shape spot pricing, overall PP contracts have been essentially locked in step with PGP monomer contracts. Both were up a cent in September, and since spot prices have been less volatile, the PlasticsExchange expects relatively little change for October.

Read the full Market Update on the PlasticsExchange website.

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