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Weekly Resin Report: Trading Activity Slackens in Response to Unyielding Pricing

Many processors were hoping for a significant year-end price break from late-October highs, while resellers reluctantly restocked at still lofty levels.

PlasticsToday Staff

November 24, 2020

3 Min Read
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Image: Peshkov/Adobe Stock

Material availability in the spot resin market continued to improve last week, although overall supplies remained tight and transactions were generally challenging to complete, reports the PlasticsExchange in its Market Update. Processor inquiries continued to flow into its trading desk, but differences in participants’ pricing ideas and outlooks kept volumes from reaching even average levels. Buyers were unenthusiastic and most orders were for truckloads rather than railcars. Many processors have held out hope for a significant year-end price break from late-October highs, while resellers have been reluctantly restocking at still lofty levels. In some cases, buyers absorbed their highest cost during this entire market cycle.

Adding to buyer hesitation is a lurking COVID-19 resurgence, with some states potentially moving toward another complete shutdown. Despite the spike in cases and potential stay-at-home orders, the financial/commodity markets, resin included, are acting less panicked and more resilient than during the spring, writes the PlasticsExchange in its weekly report.

Polyethylene (PE) prices were mildly mixed this past week, and producers are expected to give their $0.05/lb increase a third try in December. Spot polypropylene (PP) gained another penny and could be heading higher, as producers dig in to implement margin-enhancing increases for both November and December. Resin demand from China has picked up, adding some renewed pep to the export market. 

Spot PE trading was less fluid than the previous week. Activity slackened ahead of the upcoming Thanksgiving holiday, and deals were difficult to put together at the resin clearinghouse. Despite production rebounding from shutdowns in the summer and early fall, there are still some pockets of hard-to-find materials, including linear-low-density (LLD) PE Octene, high-density (HD) PE for dairy, and especially higher flow LLDPE in both pellet and granular forms, which added a penny this past week. Other grades have become more available, such as HDPE for injection and especially high-molecular-weight material for film, which slid a cent.

The new Sasol/LBI LDPE plant finally began production, but it will take time before Prime resin is available. PE producers tacked on $0.19/lb of increases from June through September. To date, they have not been able to implement their outstanding $0.05/lb, but will take a third crack at it in December. Logistics costs remain elevated and the PlasticsExchange expects trucking to be strained during the holiday week, as many drivers seek lanes back toward their home bases. Warehouses also will be keeping shorter hours. 

While a fair amount of PP resin changed hands through the PlasticsExchange trading desk last week, demand exceeded supply, leaving many orders unfilled. Prices for homo-polymer and co-polymer PP gained a penny as a result of the imbalance. Of the completed deals, Prime truckloads were the main mover, with low-mid-melt homo-polymer PP leading the way, mostly based on availability; mid-melt co-polymer PP trailed closely behind. More common grades of Prime and off-grade co-polymer PP can now be found, although they are still challenging. High volumes of high-flow co-polymer PP and Random Clarified would have traded if more reasonably priced material had been available.

Upstream PP inventories remain at the lowest levels since we began tracking fundamentals 15 years ago, notes the PlasticsExchange, so tightness persists. November PP contracts will rise at least $0.02/lb based on cost-push pressures. They could conclude with a larger gain as producers seek to enhance this month’s margins by $0.04/lb. Another $0.04/lb increase has been announced for December.

Read the full Market Update on the PlasticsExchange website.

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