Resin Pricing

Being a resin market expert didn’t used to be one of the hats you had to wear. But now more than ever, it pays to understand what’s driving your biggest cost.

Market overview: The spot resin markets were relatively slow for the second week in a row, in stark contrast to the frenetic trading seen in first half of August. Spot-trading platform The Plastics Exchange (TPE) noted that there was a steady stream of demand, but added that spot supplies have been drying up ahead of contract price increases, which are slated to take effect for September.

After a week of disappointing economic indicators, including sobering home sales and durable goods reports, as well as a downward revision to U.S. gross domestic product (GDP) in the second quarter, the American Chemistry Council's Economics and Statistics Group's running tab of positive indicators slipped by one to 12 out of 20. The ACC continues to fly a yellow-green banner to signal continued caution.

The first plant in China to manufacture polypropylene (PP) from coal-generated olefins will utilize Dow's Unipol gas-phase process. The China Shenhua Coal to Liquid and Chemical Baotou Coal Chemical Co.'s Shenhua Baotou Coal Chemicals business started up the 300,000-tons/yr PP facility in early August. Located in the Inner Mongolia Autonomous Region, the plant uses gasification technology to convert coal into a synthesis gas or syngas. That syngas is used to produce methanol, which is transformed into PP building blocks, olefins.

Overview: The spot resin market was noticeably slower this past week as transacted volumes dropped after several weeks of heightened activity, according to spot-trading platform, The Plastics Exchange (TPE). Most grades of polyethylene (PE) and polypropylene (PP) again saw stable prices, although film-grade PE continues to climb amid tight supplies. Overall resin demand remained strong, but buyers seemed unwilling to chase higher-priced offers.

Overview: The spot resin markets continued to trade actively, with the volume of transactions remaining strong, according to plastics spot-trading platform, The Plastics Exchange (TPE). Polyethylene (PE), on average, held steady this week, but there was movement amongst grades, while polypropylene (PP) remained stable for the second straight week. TPE CEO Michael Greenberg noted that overall resin demand was strong, while supply is becoming increasingly tight.

Back in the good old days, raw materials' prices typically only moved in one direction—up—and a manager was tasked with guessing the rate of increase and timing his orders to get ahead of the price hikes. That was then; now, prices for key raw materials fluctuate up and down, often dramatically, and it can be a company-ending mistake to take delivery just before prices fall.  

Overview: Spot resin trading continued to run at a "fast clip" last week, according to trading platform, The Plastics Exchange (TPE), with high volumes and sustained pricing strength. When polypropylene (PP) started showing strength in mid-June and polyethylene (PE) regained its footing in late July, it seems to have caught processors that expected continued declines off guard and now many are scrambling to fill holes in their inventory.

ExxonMobil's second -quarter earnings, excluding special items, were up 85% from the year prior, fueled by improved downstream margins and strong chemical results. First-half earnings of $13.9 billion were 60% above the first half of 2009. The chemical segment, which includes the company's plastics businesses, posted earnings of $1.368 billion-$1.001 billion higher than the second quarter of 2009. Stronger margins improved earnings by $840 million and higher sales volumes further increased earnings by $120 million.

Will the trend continue? After hitting a six-month high of $1262/tonne on April 12, the average daily price of Platts Global Petrochemical Index (PGPI) has fallen steadily with prices in May falling at a faster pace than April. The PGPI stood at $1064/tonne on May 28. First published by Platts in August 2007, the PGPI peaked at $1679/tonne on July 14, 2008 before plummeting to a low of $491/tonne on December 5, 2008.