Weekly Resin Report: Domestic Prime Resin in Scarce Supply

Jun 29, 2021

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Most spot polyethylene (PE) and polypropylene (PP) prices remained stable for the second consecutive week. The Plastics Exchange reported in its market update that although buyers hope and want to talk to the market, there are still no real signs that the U.S. commodity resin prices will reverse.

Some market participants pointed out that the reactor rate has returned to normal, and some upstream resin inventories have increased accordingly. However, domestic high-quality resins are still very difficult to purchase in the spot market because of the force majeure conditions and sales distribution of many manufacturers. There was some resistance in the market pricing early in the week of June 14th, but buyers who really needed the materials could not find a better deal and came back to pay the supplier’s asking price later this week. By announcing another round of PE price hikes in July, manufacturers indicated that they intend to maintain a firm tone, which is a popular theme throughout the year. The July nomination was made when the June contract has not yet been finalized but is seriously inclined to be implemented.

The demand for spot PE is still strong, and the completion of orders on the Plastics Exchange is again restricted by the scarcity of resin supply. Despite the increase in productivity, the contract orders were met first and the spot supply was insufficient. A manufacturer said that they have been sold out in the next two months. The completed orders are scattered in the low-density (LD) and linear low-density (LLD) PE film and high-density (HD) PE blow mold business, accounting for 81% of PlasticsExchange’s total PE business this week. Other major commodity grades—HDPE film, LDPE injection molding, and LLDPE injection molding—have moderate flows, accounting for 19% of PE transactions in the resin clearing house. The transaction price of all high-quality PE grades exceeded US$1.00/lb, except for HDPE high-molecular-weight film, which rebounded again. Due to the scarcity of HDPE blow molds and the impracticality of imported bottles, which are mostly shipped by air, HDPE blow molds still maintain the largest premium. PE demand from Mexico is as strong as the previous week. Manufacturers may ensure that the average increase in June PE contracts is $0.05/lb; at the same time, at least three manufacturers have announced their intention to raise prices again in July. Due to strong demand and limited supply, manufacturers expect price increases in June to be in the range of US$0.05 to US$0.07/lb.