Register
Forgot your password?
Skip Navigation Links
ABOUT US
REQUEST RESIN
RESEARCH
SUPPORT CENTER
CONTACT US
 
Click here for a printable version
  Add an email to join our distribution list:  
  Past Reports
Weekly Market Update
ThePlasticsExchange.com
Market Update
June 4, 2021

Summary

The resin market kicked off June with higher prices across the board for commodity grade Polyethylene and Polypropylene resins. Coming off a blowout month in May, our volumes for both fresh offers and completed transactions were lower this Memorial Day shortened 4-day work week. North American supplies remain scarce as production continues to be hampered by planned / unexpected outages, as well as a shortage of supply chain materials including monomer and the co-monomers needed to amply produce the full slate of grades. With this in mind, light offerings were also expected as sizable price increases have been nominated for June contracts and with pricing power firmly in the hands of producers, even if there was excess supply, it is doubtful they would flood the market with resin and upend the rally.

As we have suggested throughout this historic market move, the unprecedented supply shortfall leaves no room for error and every additional little hiccup that develops in the supply chain can reverberate loudly to send prices even higher. This supply/demand imbalance could further intensify with the onset of hurricane season and its potential impact on the supply chain, specifically in the US Gulf. Producers in the region have already begun notifying customers of their hurricane preparedness plans and possible shutdown procedures if needed.

Importing resin has become an even bigger challenge. Sure, supply can be procured in the Middle East and Asia at favorable prices, but shipping space to the US is already mostly sold out for June, some routes now take longer than 60 days and could cost upwards of $.25/lb. This has reduced much of the arbitrage incentive, thereby limiting the fresh flow of uncommitted resin to the US. Logistics challenges are seen locally too as soaring domestic trucking rates apply further upward pricing pressure on US resin deliveries.

Key energy prices rose again. Healthy economic data propped up Crude Oil futures heading into June, and the start of the US summer driving season boosted the market further along as drivers hit the road at pre-pandemic levels. WTI Crude futures kept climbing towards the $70/bbl mark; July WTI futures peaked on Friday at $69.76/bbl before it settled at $69.62/bbl, up a net $3.30/bbl on the week. August Brent futures established the week’s high of $72.17/bbl on Friday before settling at $71.89/bbl, up $3.17/bbl on the week. July Natural Gas traded above $3.00/mmBtu all week, within a 15-cent band, and ended Friday at $3.097/mmBtu, a net gain of $.111/mmBtu. NGLs firmed with Ethane up just over a half-cent to $.27/gal ($.114/lb), while Propane jumped nearly $.03/gal to $.9175/gal ($.26/lb).

Downstream in Monomers, interest in Ethylene was good but much of the focus was on the Propylene market which sky-rocketed during the week spurred by additional supply woes. June PGP opened on Tuesday with a trade at $.71/lb and catapulted on Wednesday when it exchanged hands twice at $.80/lb, and then bid even higher. These spot levels are well above the May PGP contract price of $.70/lb, which itself was a $.13/lb increase from April. Although June PGP rose sharply, the backwardation steepened, with July paper trading at $.70/lb on Thursday and August paper trading at $.62/lb on Friday. Volumes and participation in Ethylene were relatively robust with mixed prices. June bid/offers were at $.33 -.35/lb on Tuesday. By Thursday, June material traded down to $.3325/lb and then $.31/lb.

The Polyethylene spot market continued along its upward price trend as overall tightness fueled a $.01-$.02/lb rise in bid/ask levels. Demand continued strong and transactions were generally limited by availability rather than price. HDPE for Blow Molding remained more difficult to find than HDPE for Film – well evidenced by their price divergence; HDPE copolymers for Pail and large part injection have been scarcer than HD Crate and also priced as such. LLDPE Butene has been obtainable, while Hexene and Octene were very tough to get and commanded nice premiums. Higher flow LDPE & LLDPE grades for injection were mostly absent from the market, available material found homes quickly. LDPE Frac and 2 melt bare were available just north of a buck, while LD High Clarity resin commanded a growing premium. The successful May $.05/lb Polyethylene increase brought the 12-month contract gain to a whopping $.57/lb. Producers will try to leverage the ongoing supply/demand imbalance to implement their next $.07/lb, on the table for June.

Polypropylene prices rose as the week wore on amid ongoing shortages and once again rapidly rising monomer costs. By Friday, spot levels flirted with all-time highs. Although production has improved, most producers remain under Force Majeure conditions with contract allocations in place. A few prime railcars were made available to our market through dealer forecasts, but the quick run-up in spot PGP made pricing challenging to pin down. Even offgrade material, which has been much more available than Prime, thinned out as June commenced. However, Prime PP was not completely unavailable as imports from both the Middle East and Asia make their long journeys to the US East and West coasts. The Copolymer PP premium to Homopolymer PP held steady at $.10/lb, where it has been since mid-May. Typically, this spread is seen at $.02-$.03/lb.

May PP contracts jumped $.13/lb commensurate with the increase in PGP; the $.05/lb margin enhancer was pushed/changed to $.08/lb in June. Over the past 12 months, Polypropylene contracts have increased in the vicinity of $.75/lb, with variance amongst producers / processors. These increases combine both a cost-push PGP monomer component along with a series of successful margin enhancing hikes. Although it is still very early in the month, with monomer on the upswing, PP contracts are pointing to another double-digit increase for June.

Total Offers 10,219,679 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
PP Homo1,897,588$1.180$1.410$1.310$1.410
PP Copo1,826,786$1.350$1.540$1.410$1.510
HDPE - Blow Mold1,310,484$.960$1.140$1.070$1.120
HDPE - Inj1,249,128$.940$1.070$1.020$1.070
LDPE - Film1,142,208$1.020$1.120$1.060$1.110
LLDPE - Film1,133,196$.960$1.040$.950$1.000
HMWPE - Film694,449$.880$.960$.860$.910
LDPE - Inj524,920$.960$1.050$.990$1.040
LLDPE - Inj440,920$1.020$1.080$1.030$1.080
 
 
Privacy Statement | Copyright © 2020 The Plastics Exchange. LLC. | Patent Protected | All Rights Reserved.