The spot resin markets ended July with a bang, reports the Plastics Exchange. Activity was surprisingly robust, with numerous transactions completed across all major commodity resins. Polyethylene and polypropylene prices were widely down $0.01 to 0.02/lb, with some variance by grade. Spot material availability increased. In a number of cases, discounted prices earned the orders, further pressuring the domestic market. The Houston resin market continued to sink as it followed weak international prices lower; most commodity resins are packaged and readily available for immediate shipment.
In the spot ethylene market, a high volume of material changed hands while prices were pressed lower. Aside from an occasional hiccup, the Gulf's crackers are humming along near maximum capacity. Ethylene for July delivery saw losses from the get go and ultimately traded down a full penny to $0.335/lb, before expiring off the board. August Ethylene then came front and center and most recently transacted around the same level, according to PlasticsExchange analysts. The forward ethylene curve remains fairly flat, with less than a cent separating prices for all months through Dec 2016.
Polyethylene trading picked back up while prices continued to slide. Most commodity grades shed another $0.02/lb, though LDPE limited this week's loss to a penny. Eroding export prices are challenging fresh sales and lowering the level in the local Houston market. This has created liquid availability of packaged resin at a sizable discount to domestic prices. Plentiful resin supplies, as well as ample inventory throughout the chain, have stymied producer efforts to implement their $0.05/lb price increase in July. While the increase has been technically revised for August, processors' contrary call for a price decrease is getting louder.
There was very little activity seen in the spot propylene market. The week ended with material offered at $0.3275/lb, down a fraction and a new low for both this move and in more than six years.
Polypropylene trading improved somewhat, but was still well off its traditional pace. The bulk of recent spot transactions have been initiated by buyers' need for material, rather than surplus resin seeking a home. Still, spot prices dropped a couple cents this past week, reflecting the challenge to move the occasional off-grade railcar into a domestic market with much lower prime contract prices. Indeed contract PP prices continued to slide in July, on average decreasing a bit less than the $0.035/lb decline in the cost of PGP monomer. PP producers will again leverage the generally tight supply situation into August as they seek another price increase relative to the cost of PGP monomer.