Weekly resin report: Spot resin markets hit historically low price levels

It was an excellent week to trade spot resins; in fact, it was one of the best weeks of 2019 at the PlasticsExchange (Chicago). Fresh offerings flowed, while demand picked up to yield a high volume of completed transactions, reports the resin clearinghouse in its Market Update. Many processors who had been working down inventories either found value at these historically low price levels or just needed to place orders before the Thanksgiving break. Overall spot resin prices were mixed, with some gains seen for certain grades.

Cool Design
Image courtesy Cool Design/

November contracts are pointing lower for polyethylene (PE), and it seems that the September $0.03/lb increase could now be wiped away. PGP monomer contracts settled down $0.025/lb, which should more or less pass through downstream into November polypropylene (PP) contracts, according to the PlasticsExchange. If the crude oil market continues to strengthen, it could lend support to international resin pricing, which is largely naphtha based, while North American resins are mostly derived from the much cheaper stream of NGLs.

The spot PE market came alive this past week, as some buyers who were sitting on the sidelines got back into the game. Transactions were booked along all commodity PE grades and prices were mixed. Completed volumes were well above average, said the PlasticsExchange, and domestic transactions outstripped export deals. Amid this overwhelming downward trend, low-density PE resins had a rare up week, as already tight supplies dwindled further: Low density for film jumped $0.02/lb and low density for injection also added $0.01/lb. Linear-low-density PE for injection lost a penny, while the remaining PE grades, including all high-density materials, held steady, though with a firming undertone. A major consultancy assessed the contract PE market down $0.03/lb for November. The PlasticsExchange said that it agreed with the assessment, adding that as the spot discount has grown quite large, if producers acquiesce, they will be peeling off the September increase. It is also worth noting that if the Canadian rail strike continues, not only will rail shipments from the Great White North be delayed, but resin production could also be affected.

There was ample availability of PP, but the flow of offers has diminished. PP prices held steady and it seemed that the lower end of the pricing spectrum firmed up a tad. Once again, completed volumes and availability favored co-polymer over homo-polymer PP. Spot PP pricing at the PlasticsExchange had slid $0.03/lb over the course of the month, coinciding with the approximate $0.025/lb decrease, which should come through for November contracts. Added production from two new facilities scheduled to come on line has been pushed back into the first quarter of 2020. When it does arrive, it will bring more U.S. production to fill surplus demand that only imports have met over the past few years. That said, non-fuel use PGP inventories remain high, and with America’s strong energy position, supplies are likely to remain ample.

Read the full Market Update on the PlasticsExchange website.

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