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Weekly Resin Report: Supply/Demand Equilibrium Remains Work in Progress

Image: Peshkov/Adobe Stock weekly resin report stock image
Commodity resin prices were mixed, high-density polyethylene continued to climb while most of the other PE grades stayed steady. Polypropylene prices slid a little by the end of last week.

As the first quarter came to a close and many people started looking forward to a spring break — such as it is in pandemic times — spot plastics trading activity slowed a bit the week of March 29. Commodity resin prices were mixed, high-density polyethylene (PE) continued to climb while most of the other PE grades stayed steady, reports the PlasticsExchange in its Market Update. Polypropylene (PP) relinquished its early gains and then slid a couple cents by Friday. Completed volumes at the resin clearinghouse ran above its historic average, but fell short of the heightened levels seen during the first quarter of 2021. Still, numerous company records were smashed in March and during this quarter, said the PlasticsExchange.

The plastics industry has been recovering from a series of substantial production disruptions that began with the late August hurricanes and then continued to pile on in succession, culminating with the massive mid-February winter storm that hit the Houston/Louisiana region. The storm shut down the vast majority of US petrochemical and plastics production facilities, decimating PE supplies and driving PP resin inventories to record lows. After seeing virtually zero fresh railcar offers during the latter half of February, the recovery began and startup resin began to show up in the first half of March. The quality of offers continued to improve as the month wore on, but with widespread force majeure declarations in place, producers’ prime materials were solely utilized to fill contract orders, which were on reduced allocation during March and remained so as April began, reports the Plastics Exchange. 

Most resin reactors are now back up and running, but some are still having issues with monomer supplies and, apparently, consistently producing prime resin. The PlasticsExchange anticipated that restarting the petrochemical complex would be challenging, but it concedes that it was still a tad surprised to see such large quantities of rougher wide-spec, transitional, and off-color resin being offered into the secondary market six weeks later. Despite some demand destruction, buyers in general have been resilient, taking the elevated pricing in stride. Achieving supply/demand equilibrium is a work in progress. 

PE producers implemented $0.19/lb of first-quarter increases and have as much as $0.09/lb on the table for April. Prime blow molding resin has essentially been non-existent in the spot market, though some off-grade has begun to show and cargoes are on the water from Asia and again from the Middle East (now that the Suez Canal has cleared).

High-flow high-density PE injection grades remain extremely tight, according to the PlasticsExchange, while low-melt grades have started to appear. Linear-low-density (LLD) PE film grades continue to be snugly supplied and have crept up toward low-density (LD) PE film prices. Lower volume commodity grades such as LDPE and LLDPE for injection remain scarce, as they are not the primary resins targeted for early recovery production. Ethylene monomer costs continued to rise, adding another nickel this past week, which will help maintain upward pressure on PE pricing. 

PP supplies were incredibly short, even before the severe winter storm, so the additional disruption was untenable and prices reacted accordingly, quickly racing up to the $1.50/lb level, writes the PlasticsExchange. While some grades such as CoPP No Break and Random Clarified resins pressed beyond this barrier, most other PP materials stalled and just held this lofty level throughout March, even as contract prices fell some $0.125/lb, including an $0.185/lb slide in monomer costs offset by a $0.06/lb margin increase. Indeed, meaningful quantities of PP imports have helped to satisfy some processors’ prime needs, while cheaper off-grade materials have found favor in the hands of more flexible processors able to sacrifice quality for price. Still, incremental and inelastic demand has kept spot prices buoyed. 

Read the full Market Update on the PlasticsExchange website.

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