As The Manufacturer Returns Operation, Trade For Resin Starts To Pick Up

As The Manufacturer Returns Operation, Trade For Resin Starts To Pick Up

On May 15th, plastic spot transactions continued to improve as more and more temporarily closed production facilities resumed operations. In its latest market report, the Plastics Exchange stated that both buyers and sellers have a smooth flow of transactions, and the volume is comparable to the average volume during the strong first quarter of 2020.

The recovery of energy and raw material costs has turned market sentiment from intense negative sentiment to positive. Manufacturers have been doing their duty to reduce the production of resin to maintain a balance between supply and demand, to avoid excessive heavy inventory backlog. They also responded quickly to price cuts as needed to maintain historically high exports. Now that the market has begun to return to normal, Houston polyethylene prices have risen by a few cents, and the domestic decline of $ 0.04 / lb in April may be a total contract reduction downstream. Although May is not over yet, some producers have nominated a price increase of $ 0.04 / lb in June. In April, the contract price of polypropylene fell, and the strengthening of monomer prices shattered the hope of another fall in May.

As more and more states began to re-produce domestic orders, the spot PE market continued to accumulate momentum, approaching the level of activity before the outbreak began. Spot prices are firm and low-end prices have rebounded, although this is not enough to push prices up. The Plastic Exchange wrote that although truck orders still dominate the sales of rail vehicles, the normal feeling seems to be back and the transaction process feels natural. Some customers bought more than normal quantities of goods at particularly low prices.

On the supply side, after a large amount of resin went directly into the abyss of exports, the market quickly shifted from very loose to quite tight. So many export orders have been booked that by July, the container space for shipping to Asia was already very limited. These huge export sales absorbed the spot supply. Several manufacturers claim that many grades of products are sold out. After five months of accumulation of upstream resin stocks, producers lost a total of about 270 million pounds in April. Considering these rebounds and the latest gain of 0.04 USD / lb in June, it will be surprising if the contract market in May drops again.

The Plastic Exchange wrote that PP spot trading is good, but not ideal. There is a slight lag in demand, and there is sufficient supply to meet the demand for incoming resin. The various sectors of the PP market are still progressing slowly, but the automobile manufacturing plant is ready to reopen, which will trigger new demand. The dealer group still has some inventory that needs to be cleared, and few people are willing to buy more materials to increase their PP inventory, which may be the reason for the overall procurement weakness. Although the stable monomer cost indicates that the PP contract price in May may be corrected, the spot prices of PP homopolymer and copolymer are still slightly discounted, which brings a good opportunity. With the recovery of more manufacturing industries, the Plastic Exchange believes that the market will play a role through oversupply, and the supply will not be too large.