Resin Price Report: Buyers Unmoved by Increased Resin Inventory
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Resin Price Report: Buyers Unmoved by Increased Resin Inventory

Dec 15, 2023

Posted by Staff | May 17, 2023

Prime polyethylene (PE) and polypropylene (PP) prices held flat last week, as business became a bit more challenging amid additional upstream inventory growth and modest interest from buyers, reports the PlasticsExchange in its Market Update.

A smattering of both PE and PP off-grade railcars were available in the spot market. While some sold, offers seemed to accumulate. Prime railcars could be ordered with a little lead time. There was good demand for packaged truckloads for prompt shipment, some fringe commodity grades were scarce, and when found, buyers willingly paid a premium.

There was decent export interest, but Houston levels did not necessarily support incremental sales through the secondary market. Producers have nominated increases for May PE and PP contracts, but there is little chance for implementation, according to the PlasticsExchange.

The PE market was slightly less active compared with the previous week — demand eased as material availability has grown. Ineos lifted its force majeure on high-density (HD) PE at its La Porte facility in Texas, leaving three producers with force majeure declarations still in place. Spot PE prices didn't move, having already come off over the past several weeks. Relatively heavy offerings of wide-spec railcars continued and Prime material was available for the asking. Resellers were eager to flip railcars, so competitive offers were plentiful. They have also thinned their inventories, however, creating some sourcing challenges for packaged truckloads.

Linear-low-density PE and low-density PE film grades transacted the most on the PlasticsExchange platform, followed by HDPE blow molding. Little interest was shown for PE injection grades. Meanwhile, Shell's PE facility in the Northeast is scheduled to be down until Q3. According to preliminary figures released by the American Chemistry Council (ACC), domestic PE sales dropped considerably in April, after producers managed to implement their $0.03/lb increase in March, which was not supported in the spot market. Though resin reactor rates were dialed back down, the fall in demand, including lighter exports — the lowest since October due somewhat to competitive international offers — caused upstream inventories to swell significantly for a second straight month.

Undeterred by these negative fundamentals, producers continue their pursuit of a nickel increase for May before the unpredictable summer hurricane season. Given plentiful supplies and the soft spot market, the PlasticsExchange doubts that the May increase will take hold. Just keeping the March increase intact might be considered a win upstream, according to the resin clearinghouse.

The PP market remained soft heading into mid-month. Buyers sought truckloads more than railcars, and spot prices managed steady after already giving back the bulk of their 2023 gains. Contracts have also been unwinding their steep increases, with $0.11/lb relinquished in April and another sizable chunk expected to come off in May, alongside the imminent PGP cost decrease.

There was good demand for somewhat scarce co-polymer and processors were willing to pay a premium for spot supplies of No Break resins in a variety of melt flows. Preliminary April PP supply/demand data showed a sizable drop in year-over-year domestic sales, but they did come in about average compared to the past eight months. Reactors ran just under 75% capacity for the third month in a row while exports grew nicely. Together, this contributed to a fourth straight monthly inventory increase, albeit a relatively small one. The PlasticsExchange encourages resin pricing watchers to subscribe to the ACC for specific figures.

Read the full Market Update, including news about PGP pricing and energy futures, on the PlasticsExchange website. For a comprehensive review of resin pricing and activity in the first quarter of 2023, read this analysis by Zachary Moore of business intelligence firm ICIS.

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