Resin Price Report: Run on PP Resin

Although commodity resin trading cooled slightly the week of June 17 from earlier in the month, completed volumes still remained above average, reports the PlasticsExchange in its Market Update.

The flow of spot polyethylene (PE) and polypropylene (PP) railcars improved, and high-quality, well-priced material again sold quickly. Buyers generally ignored transitional railcars and resisted seemingly high-priced offers, while resellers actively bought truckloads to fill in supply gaps. Processor throughput appears to be improving, as they request sooner ship dates from outstanding orders.

Spot prime PE prices were fully mixed at the PlasticsExchange trading desk, with grades ranging from a half-cent lower to a half-cent higher and some holding flat. PP prices pulled back a cent but are still $0.04/lb higher than the mid-May cycle low.

Don’t hold your breath for end-of-month deals.

The export market remained quite busy, with upward pricing pressure persisting because of escalating freight rates and delayed shipments out of Asia largely due to disruptions and elevated risk in Red Sea shipping lanes. Most US exporters had already sold out of their June allotments, creating extra pent-up demand. The PlasticsExchange said it does not anticipate a flurry of end-of-month deals in either the domestic or export markets, as July pricing appears to be heading higher.

Spot PE pricing a mixed bag.

Spot PE demand continued strong: Supplies for some grades improved while others remained tight. Consequently, Prime spot pricing was a bit of a mixed bag. High-density (HD) PE for film and blow mold, and low-density (LD) PE for film and injection grades were all up a half-cent with a firm undertone, while prices for more plentiful high-density (HD) PE injection shaved off a half-cent. Linear-low-density (LLD) PE for both film and injection was steady, although transaction prices consolidated toward the high end.

Export prices for both Prime and off-grade PE continue to rise. International markets, including Mexico, Latin America, Europe, and Asia, have been easy outlets for incremental sales, while providing a rising price floor that has been supportive to the domestic market.

Nominations are in for $0.05/lb PE increase in July.

While prices are not running away to the upside, it seems thatproducers have pricing power, and there is a good chance that they could implement their $0.03/lb increase on June contracts. Meanwhile, nominations for an additional $0.05/lb price increase have emerged for July, according to the PlasticsExchange. Some processors are buying extra pounds as an inventory buffer in case there are weather-related production disruptions, which is a wise move, indeed.

PP buying surges.

Robust end-user demand and limited supplies kept the PP market humming. Buyers sought to procure additional spot material as the cycle quickly shifted in June, and resin contracts have turned toward a modest polymer-grade propylene (PGP)–driven increase. Buying surged as spot PGP prices reached $0.50/lb early last week before monomer pulled back a couple of cents. Spot PP prices came off a cent at the PlasticsExchange when the monomer rally stalled, which sparked some additional resin buying.

There has been a real run on PP resin after very high volume turnover this month, writes the PlasticsExchange. Resellers have thin stocks on hand and producers have nary a prime pellet remaining to sell in June. PP pricing is highly vulnerable to the ebbs and flows of the monomer market and there is still upward pressure from elevated PGP costs. Any further propane dehydrogenation (PDH) production issues could extend the rally. Homo- and copolymer PP spot levels are up $0.015 to 0.025/lb, respectively, and upcoming June contracts are on track to rise $0.02 to 0.03/lb based on PGP cost-push.

The weather factor.

In the meantime, supply/demand fundamentals are tight and the PlasticsExchange said it remains bullish on PP pricing. “We do not think there is enough monomer and resin in the supply chain, which could pose a real issue if the hurricane season proves to be as wild as some forecast,” writes the resin clearinghouse in its Market Update.

Read the full Market Update on the PlasticsExchange website.