Resin Update for April 2020
Contract resin prices settled flat in March as most PE producers deferred their pending $.04 cent increase. Several producers reported near record level domestic demand. Brisk demand in flexible packaging and blow molding segments supported pricing despite the plunge in energy prices. Contract prices are expected to be pressured in April as international prices are anticipated to decline further in April. Two resin producers removed their nominated price increases permanently while another producer announced a temporary voluntary allowance on its increase that could be reinstated without notice.
Domestic demand has been robust in April being boosted by COVID-19, which has bolstered demand for flexible packaging particularly in the food industry, HDPE caps and closures, blow-molded bottles, film and extrusion-coating applications, which have been driven by recent decisions by brands like Starbucks and Dunkin to ban reusable cups in order to limit the spread of disease.
In addition, several states and cities have announced delays in the implementation of pending single use plastic bag bans because reusable bags are now being banned from grocery stores in an effort to slow the spread of the Corona virus. Demand for LPDE resins, which were already in relative tight supply, also strengthened.
Although there have not been any announcements of resin plant closures due to Covid 19 we are beginning to hear that some manufacturers have been effected by stay at home orders and absenteeism due to the virus which is likely to affect overall production numbers and therefore inventory availability.
While demand is currently strong the drastic slide in crude oil prices has provided Asia with a big price advantage over domestic resin manufactures and they are certainly feeling the pressure. We would anticipate seeing a decrease in the cost of resin in the very near future unless we outages in plants that create short supplies.
We at Poly Pak wish everyone good health during these uncertain times.
As always thank you for your business!!!!