The Plastics Exchange stated in its market update report that the steady flow of buyers and sellers ’bids has given the market a good rhythm.
Spot prices are firm, mostly higher, and a large number of domestic and export commodities change hands. Overall market sentiment continues to improve, as many supply, demand and pricing concerns have disappeared under the impact of the epidemic. The Plastics Exchange wrote that strong export demand has digested most of the raw materials in the market, and the cost of energy and raw materials has rebounded further. As processors reopened the temporarily closed facilities and saw the relocation of manufacturing operations to the United States New opportunities, optimism began to permeate.
Contract prices received by processors in April fell, with polyethylene (PE) contracts falling by $ 0.04 / lb and polypropylene (PP) contracts falling by $ 0.02 / lb. Although the market had hoped for additional relief in May, the spot market has been firm since then and the contract price should now stabilize. The Plastics Exchange said that given the attractive prices and limited downside risks, it increased market-making stocks during May. Now it seems that the market has already seen a turning point, and there may be some opportunities for future rise.
The Plastics Exchange said last week's PE transactions were very active, which made the market liquidity for the entire major commodity class. The transaction volume far exceeded the level of the same period last year, and returned to the rapid growth rate in the first quarter of 2020. Both buyers and sellers have a steady order flow, the transaction is successfully concluded, and the price rises slightly, bringing a gain of $ 0.005 / lb for most resins. Processors buy materials to meet recent demand, but also to replenish inventory at still preferential prices. Dealers come to purchase truck orders to supplement later train transportation orders, and export traders continue to vigorously purchase. As producers strive to raise Houston's prices by a few cents, the highest-priced available supply has dried up. Due to the inferior materials sold at a jaw-dropping price a few weeks ago and the new disk of a few cents, both domestic and export buyers seem to recognize that the market has bottomed out and have not increased the price of incremental materials by about 1 cent problem. After the April contract gave the buyer a drop of $ 0.04 / lb to buyers, the May PE contract should now be flat, and is expected to rise another $ 0.04 / lb in June.
After a three-week downturn, PP spot trading resumed to a more typical rhythm, as more discontinued companies were back online, and prices showed a rebound. The flow of resin quotations is slightly lighter, but most brands can still be purchased. After the monomer price was firm, the spot PP price stopped declining at the beginning of this month, dispelling the hope that the May contract price would fall again. The Plastics Exchange pointed out that it did not see large-scale inventory clearance or price plunges, which may indicate that PE will bottom out. On the contrary, the situation will slowly stabilize and downstream buyers will be more optimistic.
As the demand for spot PP improves, sellers are less willing to chase buyers' bids, and in turn, processors are easier to negotiate, which helps the deal. Although transactions have increased, processors still choose trucks instead of trains. The trading volume of PP was very good, but it did not reach the level of the export market boom in the first quarter. As more processors resume work, the participants ’response remains to be seen.
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