LLDPE Resin Pricing
Resin Update for June 2017
Resin prices settled lower by $.03/lb. in May. This decrease occurred despite the fact that resin producers had initially been attempting to increase contract prices by $.03/lb. Two suppliers began advising customer’s midmonth of their intent to lower pricing. However, pricing did not settle until late as several suppliers were reluctant to meet those competitive situations. It wasn’t until after the Memorial Day holiday that the market finally acquiesced to the price reduction.
The main driver sited for the May price concession was the expanded regional price spread between North American contract pricing and pricing for the equivalent products in China. A regional price spread of $.10/lb. is believed to be the ceiling for a sustainable region price differential and a $.03/lb. increase would have brought that spread to over $.13/lb. on some grades.
Another reason for the price decrease was weak demand in May. In April, polyethylene sales volumes were recorded as the lowest of the year in both domestic and export demand and although the May industry statistics are not available yet it is expected they will be very similar to April.
At least one resin producer has formally canceled the failed May price increase while others have confirmed their intent to apply the previously announced increase to June sales volumes. Processors are pushing back hard and predicting possible further erosion in the coming months. Some of the drivers being sighted are continued lackluster demand, likely increased resin inventories, global destocking, and increased polyethylene capacity coming on in Q3.
Please contact your PolyPak America at 800-826-4000 representative to see how these market conditions may affect your specific requirements.