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Weekly resin report: Tightening supply sends prices higher

Weekly resin report: Tightening supply sends prices higher
So far in this young year, spot PE prices have already tacked on $0.015 to 0.04/lb, reports the PlasticsExchange (Chicago).

Tighter supply sent polyethylene (PE) and polypropylene (PP) prices up $0.01 to 0.02/lb last week, reports the PlasticsExchange (Chicago) in its Market Update. While the flow of fresh railcars remained slow for the second straight week and the variety of materials offered were not necessarily the most desirable, demand was robust and buyers snagged the best low-hanging fruit. The week ended with buyers seeking more well-priced resins.

Cool Design
Image courtesy Cool Design/

Much to the surprise of many participants, PE producers secured their January $0.04/lb price increase. Some contract buyers might find it challenging to purchase resin in early January and not know the final price until early February, but hey, this is the resin industry that we know and love, commented the PlasticsExchange.

PE trading was solid the first week of February. Demand remained healthy despite higher spot pricing as producers finally inked their $0.04/lb January contract increase midweek (yes, actually during February). Producers seemed to be holding back railcar offers and few choice cars, mostly high-density PE, reached the secondary market. Instead, good liquidity was provided from resellers’ inventories and, consequently, the PlasticsExchange said that its trading desk hustled to complete dozens of mostly truckload orders. Spot PE prices were generally up $0.01 to 0.02/lb, with variation seen between the commodities. Low-density and linear-low-density PE film grades were still tight, while most high-density PE resins were amply available, but still reversed some of their deep discount to other materials.

So far in this young year, spot PE prices have already tacked on $0.015 to 0.04/lb; the change in direction is viewed as healthy for a market, as prices cannot simply decrease forever. While international trade continued to flourish, concern grew regarding the potential economic threat from the coronavirus, somewhat spooking market participants. Another nickel increase is nominated for February.

Spot PP trading was slower this past week, largely resulting from tighter availability and higher asking prices. Solid demand remained, and while some balked at the penny or two bump up in price, a solid, but not overwhelming, number of deals were still completed at the higher levels. While some buyers were initially incredulous as prices begin to reverse back higher, others recognized that new PP levels were still exceptionally inexpensive on a historic basis and took the uptick in stride. Strong Prime homo-polymer PP export demand persisted, while domestic buyers mostly sought co-polymer PP railcars; some just settled for multiple truckloads to bridge their supply gap. Fresh railcar availability was tight and most transactions were sourced from either PlasticsExchange inventory or from trading partners’ supplies. After taking a serious margin squeeze over the past few months, some producers seem to be making a concerted effort to decouple PP contract prices from PGP monomer costs. A $0.03 to 0.04/lb margin-enhancing (recovering) increase has been nominated for March, and the spot market has already begun inching up.

Read the full Market Update on the PlasticsExchange website.

TAGS: Materials
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