Weekly resin report: Spot PP market shifting from bearish to neutral, with potential for bullishness

A spotty overall trading month came to a more robust conclusion in terms of volume. Prices last week were mostly steady, with some shifting by grade, reports the PlasticsExchange (Chicago) in its Market Update.

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Polyethylene (PE) producers were unable to implement their January price increase to quickly recoup the $0.06/lb of relief afforded to processors during the fourth quarter. A revised effort splitting the current hike into a pair of more palatable $0.03/lb parts for February and March might find better success.

Spot polypropylene (PP) prices slipped another cent last week; contracts have lopped off a huge $0.20/lb over the past three months and finally look steady for February, according to the PlasticsExchange. With prices already moving down substantially and an upwardly sloping forward monomer curve at hand, market sentiment is shifting from bearish to neutral with the potential for bullishness to develop.

Spot PE trading was solid this past week as January came to a close and February began. Overall availability was plentiful with pockets of slightly snug spot supplies developing in certain grades; prices were relatively steady with some small movement seen. After months of sharp declines, PE materials have generally been found at acceptable prices, taking some volatility out of the market. In a savvy move, at least a couple of producers have split their current $0.06/lb increase into two $0.03/lb increases for February and March. Such a large increase was unlikely to be accepted in one swoop given current conditions, according to the PlasticsExchange. Export interest remains exceptionally strong and Houston area warehouses are still full and playing catch-up from the year-end rush. More new resin production is on the way, so it will be worth watching how the growing infrastructure will be able to handle it all.

PP trading last week was fairly active and deals came together to generate good completed volumes. PP co-polymer was more interesting than homo-polymer for both buyers and sellers, as were the more specialty commodity grades such as No Break and Random Clarified. Despite growing supplies of PGP monomer upstream, these feedstock costs have stabilized for now and actually point to slowly rising prices ahead. The PlasticsExchange reports still seeing some imported PP resins in the market, but in smaller volumes, undoubtedly impacted by the mostly closed import arbitrage.

Read the full Market Update on the PlasticsExchange website.

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