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The Plastics Exchange reported in its market update that resin spot trading was quite active last week, but once again, more processors are shopping at windows and checking price levels instead of placing orders. As another wave of declines in spot and exports rushed ashore, indicating that domestic contract prices fell again in December, sellers had a more negative tone in the middle of the week. At the same time, the global economy is showing a downward trend, because the continued spread of Omicron variants has triggered concerns about consumer demand, which has also led to poor performance in the energy, monomer, and financial markets.

In the first week of December, polyethylene (PE) prices were flat or down by 5 nickel depending on the grade, while polypropylene (PP) prices fell by $0.07/lb, reflecting better supply and competitive offers. International resin traders have shown some interest; however, despite lower asking prices, US materials still do not have excessive competition in mass production outside of North and South America.

The November PE contract fell 5 cents for the second consecutive month, and many people believe that December will soon fall by US$0.05/lb for the third time. As the cost of PGP monomers continues to fall and the supply is sufficient, in addition to the November monomer contract drop of $0.09/lb, PP producers seem to be giving up the profits made earlier this year. According to the Plastics Exchange, the overwhelming sentiment is that prices still have room for further decline, at least until the end of the year. After experiencing a year of high prices since the hurricane triggered a massive rebound in resin in 2020, processors finally enjoyed a sharp drop in prices in the fourth quarter. 

PE activity rebounded slightly, but the purchase volume and transaction volume remained quite weak. High-density (HD) PE injection and blow mold grades have lost nickel, so in terms of pounds, it is the biggest mover, followed by low-density (LD) and linear low-density (LLD) PE film grades, all of them Both reflect the wider material availability. Low-volume LDPE and LLDPE injections maintain the strongest premiums because availability is only gradually improving. High-fluidity LDPE Injection is still one of the most difficult resins to purchase. Like LLDPE Hexene used in films, it is still very tight, as are most EVA grades. The moderate tightening of film and pipe grades has begun to ease, as a manufacturer has brought one of its equipment back online in Texas.

PlasticsExchange reminds buyers that the limited uncommitted quantity of materials at hand by dealers is maintaining a timely premium, but increasing the availability of PE railcars can notify most grades within three weeks. Those who are ready to commit can get a hefty discount on rail cars. The PE contract was reduced by 1 dime in two months, and there may be nickel prices in December. Even with a rapid decline, the PE contract will still have a net increase of US$0.33 per pound in 2021.

According to the Plastics Exchange, the sharp decline in PGP may indicate that PP producers may slow down production in an attempt to maintain profit margins. In the past week, the price of premium PP has plummeted by US$0.07/lb, and there are more discounted low-grade rail cars. PP buyers remain patient as they reduce inventory and wait for further discounted prices in the future. The forecasted contract orders may be less than expected, which supports the upstream increase in the pound.

Although this week started slowly, we saw more quotations and a large number of transactions in the second half of the week, especially low melting point copolymer PP and high fluidity random clarification resin. This is a clear sign of loose supply, because these results are usually very high. tight. Despite the overall weakness of homopolymer and copolymer PP, the main price usually remains at $1 per pound and slightly higher. Expecting some pressure on inventory this month, a PP supplier plans to perform a maintenance turnaround at its Texas plant. As with PE, PP prices may have room for further decline; however, the bottom or at least a rebound may be approaching, as the lack of imports may start to increase demand.

Read the full market update on the PlasticsExchange website, including news about PGP pricing and energy futures.

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