Spot resin market activity picked up the week of June 7, reports the PlasticsExchange in its Market Update. While domestic prime railcars remained mostly elusive, the flow of wide-spec offerings improved. Prices for most polyethylene (PE) and polypropylene (PP) grades were steady with a firm undertone, hanging at or near peak pricing for this cycle.

Though resin production has returned, and upstream resin inventories appear to be growing, pricing power remains firmly in the hands of producers. Good downstream and consumer demand are supporting elevated price levels, a now-familiar refrain. Most producers are still under force majeure conditions or have contract allocations in place, so upward pricing pressure continues. Producers are intent on implementing their June price increases and keeping the extraordinary rally intact. Even though most domestic PE and PP grades are difficult to source, the PlasticsExchange feels that exports need to ramp up or else upstream resin supplies could begin to back up instead.

PE resin price increase on the table.

Solid demand for PE chased inadequate supplies with another price increase on the table — this time it is $0.07/lb for June. Most PE grades were trading over $1.00/lb, with super-scarce high-density (HD) PE Blow Mold commanding the largest premium. HDPE high-molecular-weight (HMW) film, which was battered a bit last month, has been staging a recovery and rose another penny this past week, back up into the $0.90s per pound. Low-density (LD) PE film was the most actively traded resin at the PlasticsExchange desk, with relatively large volumes of fractional melt changing hands. LDPE Clarity with additives has been in very high demand, but transactions were limited by scarce supplies. The same was the case for HDPE Injection; Crate grade was selling because it was somewhat available, but many buyers seeking Pail grade and higher melt flows were disappointed by the lack of material. Spot domestic supplies of all prime Phillips process HDPE Blow Mold grades were mostly unavailable, but impressive volumes of imported material have come to help satisfy demand. Prime spot supplies of linear-low-density (LLD) PE 20 and 50 melt pellet or granular, prime low-density (LD) PE 8 or 20 melt, and Rotomolding grade resin were nowhere to be found. There was continued strong demand from Mexico for most PE grades, and Latin American buyers, frustrated by delays in Asian imports, have also started to come back to the United States for material.

Spot PP market stands its ground.

The spot PP market held onto its gains from last week but did not advance further, as PGP monomer lost ground, softening the projected June price increase, according to the PlasticsExchange. Most PP trading was for Prime co-polymer, filled by Middle East produced material on the East Coast and Asian imports on the West Coast. Off-grade buyers were served by US-produced resin, which continued to flow, while domestic prime has been reserved for contracts.
Buyers needing prime material are still paying large premiums in this seller's market. In fact, prime co-polymer asking prices around $1.50/lb and homo-polymer in the $1.40 per pound range are right around the record levels seen in March. Homo-polymer was still at a $0.10/lb discount to co-polymer PP, where it has been since mid-May. Although homo-polymer trading was not as active, supply started to show minimal signs of improvement as Prime low and mid-melt offers made their way into the market. Much like PE, June PP contracts are well-positioned for another increase, with producers pushing for an $0.08/lb margin increase in addition to a rise in the June PGP contract.