Weekly resin report: Transactions rebound as industry returns from successful NPE2018

A heightened volume of resin transactions last week more than made up for the below-average results the week before, which was affected by massive industry participation at NPE in Orlando, FL. While last week’s deals were spread out among all major commodity grades, the bulk of the material that changed hands was polyethylene (PE), especially film-grade resin, according to the Market Update published by the PlasticsExchange (Chicago).

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PE prices were flat to a half-cent lower, while polypropylene (PP) prices were steady, but with a firm undertone. PE producers are taking a third swing at their $0.03/lb PE price increase; PP producers are seeking to expand margins by several more cents in May, but the price increase that will actually come through might be limited to the commensurate rise in PGP monomer costs. Improved export demand is providing some support to the PE market, reports the PlasticsExchange. 

The spot PE market got back on track as participants returned from the successful NPE trade show. Buyers, many of whom expect prices to slide, seemed to have been limiting purchases until after their face-to-face meetings with suppliers, and, indeed, they returned to the market with vigor. The resin reseller community appears to have shaken off a sluggish April in terms of volume as May sales can already be considered healthy. The most actively traded resin on the PlasticsExchange was low-density (LD) PE, mostly film grades, but injection, as well. LDPE remains tightly supplied despite the half-cent loss, which was really just an easing of premium. Linear LDPE for film was also slightly softer, both butene as well as the higher alpha olefins. 

Also worth noting is active export demand from China, particularly for high-molecular-weight PE and high-density PE blowmolding resins. With crude oil continuing on its upward path, North American PE producers, with abundant cheap feedstocks, continue to enjoy a sharp cost advantage, allowing for attractive (mostly direct) pricing to international buyers. This has helped take the edge off the widely anticipated lower pricing, which has been expected to affect the domestic PE market, but has yet to substantially appear. 

PP trading activity also picked up. Better demand was felt from both processors and resellers, some of whom have confidence to add to their inventories. While surplus prime PP resin remains scarce, there has been a steady flow of off-grade railcars targeted to the domestic market, where prices well exceed the clearing price for incremental exports. As such, imported PP resin also continued to make its way to U.S. shores and help satisfy demand. Spot PP pricing was firm and seems to have some upside room as the market braces for a solid increase, a nickel or so, to be confirmed for May contracts. This is based on both snug supply/demand dynamics and rising monomer costs, writes the PlasticsExchange.

Read the full Market Update on the PlasticsExchange website.

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