After a brief lull in trading, as noted in the previous weekly resin report, the resin markets heated right back up last week. The flow of offers was heavier, spurred by lower polyethylene (PE) prices. Polypropylene (PP) demand was also good despite prices moving higher. Completed volumes for both of these major commodity resins were high, reports the PlasticsExchange (Chicago) in its Market Update.
|Image courtesy Cool Design/
Despite efforts to implement that pesky old $0.03/lb price increase, a major consultancy estimated August PE prices averaged $0.03/lb lower, which more accurately reflected market conditions, according to the PlasticsExchange. PP contracts should settle higher, around $0.02/lb, and mostly cost-push driven. Given the Chinese tariffs, turmoil in Turkey, falling Houston PE prices and opportunistic inquiries from other regions, the export markets are in a strange flux.
After a relatively rare quiet week, the spot PE market was again off to the races! In general, processors had been buying minimally to fulfill near-term needs rather than loading up at contract-type levels, which many considered lofty. Over the past month, spot prices have been softening, with some periods of sharp erosion, as the 25% Chinese tariffs on linear low-density PE and high-density PE resins lingered. The tariffs were officially implemented on Thursday and the actual impact steepened. Spot prices were down across the board, ranging $0.01 to 0.025/lb lower by grade, with non-tariffed LDPE falling in sympathy. This break provided enough incentive for buyers to consider stocking up a bit as we head toward a seasonally strong period for manufacturing.
The overall PE market could continue to move lower, as material slated for China seeks to find new homes and upstream inventories swell further, according to the PlasticsExchange. Value is starting to be seen as some participants, traders included, began to refill their coffers. In the contract market, a major consultancy indicated PE prices down $0.03/lb, quite contrary to the $0.03/lb price increase that has been on the table since February. It has yet to be seen if producers will comply with the suggestion, but PlasticsExchange analysts agree with the decrease. There is no shortage of opinions on how the PE market will react over the coming weeks and months as the situation remains volatile and can turn on breaking news. Stay tuned as these markets continue to ebb and flow.
Spot PP trading was quite active at the Plastic Exchange, as a large number of deals were completed amid a better flow of available material. Transactions were well distributed among homopolymer (HoPP) low flow, copolymer (CoPP) mid and high flow, Random Clarified and No Break resins. Well-priced offers came and went quickly; Mexican buyers added to the demand. With August contracts poised to increase a couple of cents, which some see as a cycle peak, processors scoffed at seemingly expensive railcar offers, and instead picked away at lower priced truckloads to tide them over. Still, prime HoPP and CoPP prices properly reflected prime market conditions, adding another penny. If August PGP and PP contracts indeed confirm up $0.02 to 0.025/lb, current spot monomer levels already point to similar relief come September. Of course, in volatile conditions, fundamentals can shift.
Read the full Market Update on the PlasticsExchange website.