Although spot resin trading improved compared with the last couple of weeks and completed volumes were almost average, activity still fell short, according to the PlasticsExchange (Chicago). This has been the first extended quiet trading period since December, said the resin clearinghouse in its Market Update.
Spot resin availability is good, with most commodity grades ready to ship at favorable prices. Polyethylene (PE) and polypropylene (PP) prices both remained pressured and ceded $0.005 to 0.01/lb last week, but the quick, nearly 10% upward spike in oil prices reminded market participants that this is a global market and can be vulnerable.
PP contracts are decreasing along with PGP monomer, as expected, but the settlement was down just $0.035/lb. PE contracts will not increase the nominated $0.03/lb, according to the PlasticsExchange. They will be flat, at best, and are now even leaning toward a $0.03/lb decrease. Export demand is good, but buyers’ price expectations are often unrealistic. It has been a very active first half of the year; the end of the quarter is just ahead—perhaps it will also
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The spot PE market began the week still slow, but started to show renewed signs of life. There were even spurts of outright action. Processor inquiries picked up significantly and suppliers were happy to fill those requests, eager to lighten their uncommitted inventories. Even with the enhanced activity, completed volumes at the PlasticsExchange still fell a tad below average. However, it was certainly a step in the right direction. PE prices slid another cent across the board, as weak spot demand continued to weigh on the market, which has inspired a louder call to decrease June contracts by the very $0.03/lb that producers have nominated to increase. PE export demand continues to flow from every major region, but other competitive offers have been difficult to match. This could change as crude oil rebounded soundly, which should help support free-falling international resin markets. Sentiment remains somewhat negative, but the PlasticsExchange advises maintaining ample on-hand inventories, especially while geopolitical tempers are flaring.
Spot PP trading improved last week, as processors picked away at well-priced offers, but they shied away from relatively high asking prices when presented. PP prices had peeled off a penny early in the week, but regained a half-cent on Friday. Most commodity grades are available in truckload and single railcar volumes, but multi-cars are a challenge to find. June resin contracts followed monomer contracts lower and settled down $0.035/lb, which was about $0.01/lb light, so some could see a little more relief ahead. While the overall market tone remains heavy right now, it seems that downside could be limited as upstream inventories are the lightest that the PlasticsExchange has seen in the dozen years that it has been tracking activity. Export demand, particularly from Mexico, remains good; other regions are asking, but U.S. material is not quite as competitive overseas.
Read the full Market Update on the PlasticsExchange website.