Although completed volumes in the spot resin markets dropped last week compared with the week before, they remained well above year-ago levels, reported the PlasticsExchange (Chicago) in its Market Update. The flow of fresh railcar offers has declined from the pace seen during the fourth quarter and spot prices have firmed, cleaning up the lower end of the pricing spectrum. Processors initially balked at higher asking prices, but some came back late in the week and paid up for material.
Select grades of both polyethylene (PE) and polypropylene (PP) resins were challenging to source; most low-density PE film grades have been outright scarce, commanding a healthy premium, especially for immediate availability. PE and PP exports have been strong, contributing to tighter supplies, and prices have begun to tick higher, said the PlasticsExchange.
The spot PE market continued to be red hot. High volumes of linear-low-density and low-density PE for both film and injection changed hands, and pricing was firm. High-density PE interest remained lackluster and pricing stayed soft. PE buying was equally spread between processors and resellers, with about half needed for immediate delivery and half ordered for February. Fresh producer railcar offers remained scarce, which encouraged suppliers to hold their ground and generally command higher selling prices. Low-density PE film, in particular, has been tight, as many railcars from at least two different producers slated for December shipment did not roll until January, while new low-density PE production also has been delayed.
At the start of the new year, the long PE down-cycle had been disrupted, at least in the spot market. Rising spot prices have been shrinking their discount from contracts, but it remains to be seen if there is enough momentum to implement the current $0.04/lb contract increase slated for January, according to the PlasticsExchange. In the meantime, rising ethylene costs have impacted PE production margins, especially at the export floor price, so fresh Houston offers have also started coming in a few cents higher.
Demand chilled a bit in spot PP trading. Transactions were mostly challenged by the unrealistic price expectations of buyers, which is understandable given that the spot market has quickly gone from quite loose to relatively tight, noted the PlasticsExchange. Co-polymer PP availability appeared ample, but most of the railcars offered were less desirable low melts when considering better high-flow demand. A steady stream of homo-polymer PP buyers picked off both truckload and railcar quantities, mostly prime. The deeply discounted material that transacted in December is already mostly gone. Despite relatively flat contracts in January, spot prices seem to have several more cents of upside potential.
Read the full Market Update on the PlasticsExchange website.
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