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Welcome to the Resin Price Report Update for April 2023. Here are some highlights of the report:

- Resin trading activity remains strong in April

- Spot PE and PP prices soften

- Ethylene trading volumes are weak, with spot prices decreasing

- PGP prices heading for double-digit decrease.

Resin Price Overview

Despite force majeures affecting supply, spot resin trading improved, with discounted Polyethylene and Polypropylene deals meeting solid demand. Spot prices for most Prime commodity grade resins slid back a cent, while upward cost-push pricing pressure from feedstock monomer eased toward the end of March. Spot Polyethylene volumes were robust, and although spot HDPE resins gave back a net $.01-.02/lb this month, they have been the strongest of the Polyethylene grades so far in 2023. 

Meanwhile, spot Polypropylene trading was very good, and resellers had thinned their inventories as the fierce monomer rally finally busted, lending solid demand for Prime packaged PP resins. Spot monomer interest waned along with lower pricing, and overall volumes were relatively soft. Ethylene remained in the spotlight after traders digested Nova's announcement that one of their steam crackers had gone offline. Spot Mar Ethylene chopped off nearly $.02/lb during the week and settled Friday afternoon at $.245/lb.

Detailed Resin Price Fluctuation

Strong trading activity for spot PE

Spot polyethylene (PE) volumes were strong in the last week of March as ongoing force majeures caused buyers to turn to the market to supplement supplies and producers sought to sell extra pellets as the quarter ended. However, not all resin grades participated in the discounts, and some low-ball buyers had unfilled demand. 

Despite being among the strongest of the year, resin trading activity in the week of March 27 was still well below historic trading averages at the PlasticsExchange, and it remained weak year-on-year for the quarter. Although spot high-density (HD)PE resins gave back a net $0.01 to 0.02/lb this month, they have been the strongest of the PE grades so far in 2023, averaging a $0.06/lb increase. Meanwhile, low-density (LD) PE and linear-low-density (LLD) PE grades also slid $0.02/lb in the spot market during March but remain up $0.02/lb for 2023.

The PlasticsExchange suggests that the March price increase was not appropriate based on its daily trading activities and spot prices, despite five producers nominating another nickel for April. Contracts were not completely settled by the end of the month, and the PlasticsExchange still thinks they should be flat, holding on to the $0.03/lb January gain. 

However, the outstanding increase should be attempted again in April, in case conditions turn more bullish. In summary, spot PE availability has been fairly tight, but demand has lacked the oomph to carry prices higher, and most PE grades relinquished the penny gain garnered the previous week.

Homo- and co-polymer PP offered at exceptional prices

Last week, the spot polypropylene (PP) trading was strong as prices followed spot polymer-grade propylene (PGP) lower. Several groups of offers for homo- and co-polymer PP caught the attention of buyers who considered the deals too good to pass up. Resellers had depleted their inventories, so the demand for prime packaged PP resins was solid. 

While PP orders were already better in the second half of March, many buyers who had resisted purchasing beyond minimums earlier in the year might start to replenish their inventories as April contracts are already pointing lower based on falling monomer costs.

March contracts settled at $0.08/lb, which brings this year's total increase to $0.23/lb, considering an average $0.03/lb margin crunch during Q1. The PlasticsExchange feels that the actual margin compression was more significant in the spot market, as its PP prices peaked in early March, up a total of $0.13/lb before eroding a nickel over the balance of the month. 

With spot PP already starting to recognize imminent April PGP-led cost relief, prices could soften further. However, they need not tumble from here, as they are a good value and are already discounted to anticipated April contract levels, according to the PlasticsExchange.

Not so much change to spot Ethylene

Interest in spot monomer decreased along with lower pricing, with Ethylene transactions surpassing those of Propylene and overall volumes being relatively weak. Ethylene continued to be in the limelight after traders considered Nova's announcement in the previous week that one of their steam crackers had gone offline. 

On Monday, a deal for Apr Ethylene was made at $.24/lb in Texas. A trade happened on Tuesday where the scheduled time for selling Mar and Apr Ethylene was swapped in Louisiana for the same price, while in Texas, a deal was made for the same months with a small increase in price for Mar. The premium to swap the same months in Texas increased by about a penny the following day. Thursday saw the largest daily volume and numerous Ethylene trades executed, including May Ethylene sold using future pricing, Apr Ethylene traded twice at $.22/lb, and a deal for 1Q '24 deliveries was finalized at $.21/lb in Texas. In Louisiana, spot Mar Ethylene was brokered one final time at $.185/lb. Although bids and offers were presented on Friday, no further deals were completed. 

Spot Mar Ethylene decreased by nearly $.02/lb throughout the week and settled Friday afternoon at $.245/lb. The prices for later months fell even more, and all months in the last quarter of 2023 dropped to less than $0.20 per pound, and the difference in prices between the earlier and later months increased.

Polymer Grade Propylene prices headed for double-digit decrease

Until Wednesday afternoon, Polymer Grade Propylene (PGP) trading activity was low as many participants were attending an industry conference. The first PGP transaction took place on Thursday morning at $.49/lb for April delivery, and the market then began to decline, with Apr PGP prices dropping to $.4825/lb, $.475/lb, and then $.47/lb by the end of trading on Thursday. On Friday afternoon, Apr PGP prices fell again to $.465/lb, a decrease of $.02/lb for the week, and a spot Mar PGP contract was sold at $.47/lb before the contract expired. 

During the final trading week, the average weighted price for Mar PGP settled just below $.605/lb, a decrease of $.0075/lb. Deferred contracts suffered losses of almost two cents in many cases, causing the backdated forward curve to widen. On Friday, it was announced that contract negotiations had concluded, and Mar PGP had been officially settled at $.58/lb, an increase of $.08/lb, which was less than what was expected when spot prices were at $.73/lb in early March due to PDH production issues. 

Although production problems were eventually resolved, spot prices continued to decline for the rest of the month, and the PGP Q1’23 contract gains totaled a significant $.26/lb. With the spot price of April PGP already at a significant discount compared to the March settlement, it seems that a double-digit decrease is on the horizon, providing price relief.

Energy Complex Mixes as Crude Oil Extends Gains, while Nat Gas Drifts Lower

During the last week of March, the energy market had a mixed performance. Crude oil prices rose due to a decrease in domestic reserves and a disruption in exports from Iraq's Kurdistan region. 

Meanwhile, natural gas prices declined due to lower demand caused by warmer spring temperatures, despite production remaining close to record levels. May WTI and Brent both experienced drops early in the week but ended with gains by Friday. May WTI fell to $69.13/bbl on Monday before recovering to settle at $75.67/bbl on Friday, a weekly net gain of $6.41/bbl or 9.3%. May Brent fell to $74.80/bbl on Monday before rising to $79.77/bbl on Friday. 

May natural gas futures decreased in price after rolling over to the front month. Prices rose to a weekly high of $2.299/mmBtu on Monday before falling to $2.074/mmBtu on Friday. The week ended with May natural gas at $2.216/mmBtu, down a little more than 12 cents from the previous week. The prices of natural gas liquids (NGLs) were also mixed, with Ethane prices decreasing slightly to $.240/gal ($.101/lb) and Propane prices increasing just over half a cent to $.795/gal ($.225/lb).

Reference:

• The Plastics Exchange. (2023, March 01). Weekly Resin Report. Retrieved from https://www.theplasticsexchange.com//Research/WeeklyReview.aspx

• Plastics Today (2023, April 05). Resin Price Report: End-of-Month Deals Revitalize Demand. Retrieved from https://www.plasticstoday.com/resin-pricing/resin-price-report-end-month-deals-revitalize-demand