Spot plastics trading activity improved the week of July 11, reports the PlasticsExchange (Chicago) in its Market Update. After a slow start in July, the flow of both resin supply and material requests returned to a more typical pace. Polyethylene (PE) demand was good from both the processor and reseller sectors. Polypropylene (PP) buyers mostly were looking for special deals and seemed armed with patience. Spot resin prices firmed up: PE saw gains of $0.005 to 0.015/lb, depending on the grade, while PP prices were mixed, with generic prime gaining a penny and export and off-grade prices under pressure. 

PE demand was good: Processors were buying to fill in supply gaps, some resellers had short orders to cover and market sentiment was moving away from bearish, now approaching neutral. While PE availability increased, the volume of offers, which was still relatively limited, would not suggest that the market is grossly over supplied and ready for prices to tumble, according to the PlasticsExchange. LDPE and LLDPE for both film and injection remains relatively tight, although some material has been trickling into the secondary market, which is quickly placed. While HDPE film and blowmolding grades are a bit looser, the market is far from flooded with material. 

PE production was off sharply in June, affected by reactor issues caused by planned and unexpected outages.

Expectations for a price decrease on July contracts, which had already been downgraded to only hopeful, seems to be waning further. It is starting to feel like average PE contracts will roll flat again in July. PlasticsExchange analysts note that they would not be surprised to see a fresh price increase letter floated, if only for good measure. 

The spot PP market also saw increased activity, as processors continued to peck at well-priced supply, but in limited quantities. A steady flow of wide-spec railcars continued to pelt the secondary market, while resellers offered up their warehoused inventories. The cumulative effect was good liquidity among most commodity grades. Prices were mixed, with domestic prime edging a penny higher while off grade remained soft and the export market was more than adequately supplied. 

According to the preliminary reports issued by the American Chemistry Council, cited by the PlasticsExchange, PP production remained very strong: Reactor rates ran at nearly 95% and have been above 90% in all but one of the last 13 months.

Read the full Market Update on the PlasticsExchange website.