In its latest market report, the Chicago plastics exchange said last week was a challenging week for U.S. spot resin trading.
Demand for the resin is down, and some deals are still hard to close.
Dealers continue to run down their inventory, typically stocking only in the event of continuous sales.
Spot commodity resin prices fell further as buyers became scarce and supplies accumulated.
Spot polyethylene (PE) prices fell 2 cents due to larger discounts on the contract prices of other goods and a number of degraded/near-premium materials.
The price of polypropylene (PP) fell by one cent.
The recovery in individual costs will offset the expected fall in April contract prices.
Most participants recognized that the historically low prices of these resins would create an excellent opportunity to build inventory, but it could be a while yet as the price of resins continues to decline.
Exports are still strong - producers are doing their best to ship surplus materials out of the domestic market.
Resin production is expected to eventually decline in April, according to the plastics exchange.
The PE spot market hit the brakes last week.
Despite low prices, market activity remains limited.
As global public health events unfold, trading volumes on the plastics exchange are well below average.
As initial purchases surged in April, consumers began stocking up on groceries and other items for weeks or even months, but other nonessential businesses have been temporarily shut down for weeks and the supply chain has been affected.
Spot PE prices have steadily fallen 2 cents in the past week as products such as thin-film LDPE and injection-grade LLDPE have lost some of the premium they had received from earlier tight supplies.
A growing number of processors are demanding lower contract prices in April, but it is unclear whether they will succeed and by how much.
Some producers have cleared large inventories to help ease the burden of still-strong production and slowing global demand.
Much of the dumped material will reportedly go to China, which has restarted parts of its economy while other countries have been largely silent in responding to public health incidents.
Exported resins may now not necessarily need to be processed, as Chinese companies appear to have been taking advantage of the situation to acquire and store goods at low prices.
Spot trading in PP slowed and was more available, but volumes were less than ideal, and prices gave up a one-cent gain from the previous week.
PP buyers are more active than PE customers, and there are still transactions to be completed;
However, with dealers running down their stock of existing truck orders, most of the goods available for purchase are new rail orders.
Continuing that trend, buyers are generally looking for more conservative trucking orders in uncertain times.
Among the limited deals that have been completed, copolymers are preferred to PP homopolymers, and rail orders continue to outsell trucks.
PGP unit costs have recovered, so the April drop is likely to be modest.