Market Update — November 29th, 2024
Spot resin trading maintained a brisk pace through midweek, tapering off as the Thanksgiving holiday approached. The volume of resin offers decreased notably, suggesting that producers had completed another phase of inventory reduction. Prime domestic railcar offers were scarce, though some offgrade cars remained available. Prices for prime Polyethylene (PE) and Polypropylene (PP) held steady, with market sentiment improving; many anticipate a market bottom in December, followed by an upturn in the new year. There was a surge in last-minute truckload requests from domestic processors aiming to maintain operations over the long weekend and into early December. Export trading remained robust, driven by strong demand and sellers eager to finalize December sales and dispatch shipments before year-end. Chinese buyers were particularly active, securing cargoes scheduled to arrive before the Lunar New Year holiday commencing in late January. Houston-area warehouses are experiencing significant congestion, causing railcar backups and packaging delays. Many packaged stocks in the Gulf region are earmarked for export; however, some vessels have bypassed the Houston port, resulting in substantial volumes of outbound containers being deferred to future bookings.
Polyethylene Market Dynamics
Polyethylene activity dominated the spot resin market during the abbreviated holiday week. Buyers continued to seek favorable deals, while suppliers with available inventory aimed to bolster their November figures. Our trading team achieved solid volumes for the month, second only to October this year. Completed PE volumes significantly exceeded typical levels, with the majority of transactions directed toward the export market, though domestic buyers also procured prime and offgrade lots. Spot prices remained stable, and the market tone was more optimistic. Some buyers initially pushed for lower prices but returned to find previous offers had been sold, leaving demand unmet into the holiday weekend. Activity was concentrated on Linear Low-Density Polyethylene (LLDPE), encompassing both film and injection grades, surpassing the combined totals for Low-Density Polyethylene (LDPE) and High-Density Polyethylene (HDPE). Producers made concerted efforts to alleviate surplus inventory during November and are likely to continue this strategy into early December, albeit to a lesser extent.
Inventory Management and Contract Pricing
The ongoing upstream inventory liquidation facilitated increased spot trading volumes. It remains to be seen whether resin reactor operating rates were curtailed in November to align with the vigorous upstream sales efforts. Despite ample material availability and general market softness during November—which could justify further price reductions following the 3-cent decrease in October—we anticipate that Polyethylene producers will maintain contract prices at current levels for the month.
Polypropylene Market Observations
Spot Polypropylene (PP) activity decelerated from the robust trading observed in previous weeks. The limited availability of prime domestic railcars and a narrower selection of offgrade materials contributed to this slowdown. Prices for prime PP remained unchanged, reflecting a cautiously optimistic market outlook. Export demand persisted, with international buyers seeking to secure shipments ahead of year-end. Domestic processors exhibited measured purchasing behavior, focusing on immediate needs while monitoring market developments.
Conclusion
As the industry navigates the final month of the year, attention is focused on inventory levels, production rates, and market demand. The interplay of these factors will shape pricing dynamics and trading activity as we approach the new year. Stakeholders are advised to stay informed and agile in response to evolving market conditions.
Disclaimer: The information and data in this report are gathered from daily exchange observations, actual transactions, and commercial interactions with producers, distributors, brokers, and processors. These sources are considered reliable, but the accuracy and completeness of this information are not guaranteed. Any decision to purchase or sell as a result of the opinions expressed in this report is the full responsibility of the person authorizing such a transaction. Our market updates are compiled with integrity, and we hope that you find them of value. Chart values reflect our asking prices of generic prime resin bagged in Houston, TX.