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Resin Price Report: Demand Stirs After July 4 Lull

As expected, spot resin trading was sluggish during the July 4 holiday week, as much of the industry took an extended break. While fresh railcars were scarce, some resellers were looking for early month sales for pre-forecasted cars. Still, it took until midweek before meaningful volumes changed hands, reports the Plastics Exchange in its Market Update. Demand then grew, as more processors returned to the market to source material.

Prime PE and PP end the week flat

Though thoughts of typical summer doldrums initially weighed on pricing, sentiment improved as exporters shared stories of their heavy late June sales, much of which were destined for China. Both Prime polyethylene (PE) and polypropylene (PP) ended flat for the week and traders wondered if this could really be the bottom. The Plastics Exchange said it is neither wildly bullish nor expecting the market to explode to the upside. On the contrary, it feels that after such a substantial sell-off in spot prices during the second quarter, there is limited downside risk ahead. Moreover, the gulf waters continue to heat up, increasing the chance for a weather-related upside surprise.

Late-week rebound for PE prices

PE, the more active resin, was still somewhat subdued to start July. Spot levels dipped by a penny midweek only to recover by Friday as demand revived. The late-week rebound kept PE prices virtually unchanged for a fifth straight week. Spot prices remained well discounted to contracts and some processors found these opportunities compelling. Injection grades outshone other resins. High-density and linear-low-density PE led the way, and while there was demand for low-density PE, too, sought-after high flows were not to be found.

International buyers returned to the Houston market for material, citing the lack of competitively priced offers from Asia. June PE contracts decreased $0.03/lb and remain up $0.03/lb for the year. There is a  $0.03/lb increase on the table for July, and while the market is starting to feel more balanced, the PlasticsExchange does not yet see a rally on the horizon. However, adds the resin clearinghouse, it will be interesting to see the initial June American Chemistry Council (ACC) supply/demand figures and whether the heavy resin exports have started to trim upstream inventories.

Prime ready-to-ship PP resin commands a premium

PP trading was limited last week, with quick truckloads in primary demand to tide over slow-moving railcars alongside some normal customer order flow. Reseller supplies were sparse, and buyers willingly paid a  premium for prime ready-to-ship resin. There were a few well-priced off-grade railcars held over from June, and while prime railcars were not overtly offered, they were available for order into July production.

Spot PP prices have been flat for a month and contracts have been coming down to close the gap. Spot polymer-grade propylene (PGP) monomer took a wild wide up and back down during the first four months of the year and has held relatively steady for the past 60 days. With the start of a new month and quarter, and reduced market volatility at hand, PP prices have already taken the brunt of their hit, according to the Plastics Exchange, which has begun to gently replenish select grades and expects to continue picking away as opportunities present themselves in the weeks ahead.

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

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