Weekly resin report: Spot resin trading roars to life in August

Spot resin trading during the first full week of August reached the highest weekly volume so far this year, about three times the average, reports the PlasticsExchange (Chicago) in its Market Update.

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The order flow was well diversified and nicely spread between polyethylene (PE) and polypropylene (PP), truckloads and railcars, prime and off grade for both domestic and export shipments. Trading activity initially was demand driven, and then amply accommodated by aggressive suppliers, willing to meet some super sharp bids in order to complete transactions and move large amounts of resin. The export markets have remained active, but parts of Europe are on holiday, and traders are generally cautious given trade wars and new resin production coming online in both the United States and abroad. 

The spot PE market roared to life the entire week, despite very little price change among the commodity grades. Completed volumes were well above average, as both railcars and truckloads changed hands at a rapid clip. Generic Prime prices, which have been sliding, were mostly flat except for linear-low-density PE Injection, which lost a penny as availability improved. Many cars are delayed or caught up in the Houston shipping grid, while some terminals are bulging with material causing packaging dates to be pushed out. In general, PE material that is currently packaged and ready for immediate shipment has been commanding a premium versus fresh railcars that have yet to ship, notes the PlasticsExchange. 

PE producers reaffirmed their intention to raise prices in Q3: Currently $0.03/lb is on the table for August and an additional $0.04/lb has been proposed for September. Although these increases currently seem out of place given the $0.03/lb contract decrease in July, writes the PlasticsExchange, a production issue or a major storm could disrupt the supply chain and cause a sudden jump in prices. That is at least partly why the recent nominations exist. Buyers should be aware that the 2019 hurricane season has been re-forecast to be on the upper side of average, adds the PlasticsExchange. 

PP trading continued its hectic pace during the first full week of August. As contract resin prices closely shadow monomer costs, market sentiment improved a touch with the higher spot propylene quotes this week. Still, overall homo- and co-polymer PP pricing was flat, with demand favoring co-polymer materials.

In general, PP availability was good, but not overly abundant; suppliers were aggressive enough with their off-grade railcar pricing, and the PlasticsExchange said that it was able to fill nearly every viable order that was presented. Packaged truckload offers were a bit scarcer and commanded a premium for immediate delivery. Given spot PGP costs, little change is anticipated in August PP contracts. With the peak hurricane season approaching, it’s advisable to keep ample supplies on hand and on order.

Read the full Market Update on the PlasticsExchange website.

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