State of the Plastics Market January 2018

Here’s your State of the Plastics Market for January 2018 and what to expect from your plastic suppliers.

Sorry to be the bearer of bad news, but the price for all grades of PP are shooting through the roof right now, and it has seemed to have all happened in the first 3 days of this week.

Domestically, polymer grade propylene (PGP, the material that they make polypropylene out of) is seeing extreme tightness in the market.  From Monday to Wednesday of this week, the price of spot PGP jumped up $.0525/lb.  On Thursday morning, there are offers of $.05-$.06/lb over the Wednesday settlement price that are not being accepted, meaning they are not high enough.  This means that PGP contract settlement prices for contract buyers is going to be at least $.08/lb but could go higher.  This settlement price is for contract buyers translates spot buyers having to pay above this $.08/lb once the dust settles.

This huge spike is due to a few factors:

•                -Dow has a plant down which is due down a few more weeks. 
•               -Enterprise is ramping up, but is still not producing on spec and is having other issues coming back up.
•               -Propylene inventories are at 5 year lows, and are sitting at 53% of January 2017 levels.
•               -Information from overseas (which is a week or so old) is coming back that the PP market overseas is tightening as well, and that prices, while up in all major markets were up, are set to follow the US up.
•               -The price of WTI crude oil, where a lot of propylene feed stock comes from during the production of gasoline, is above $64/bbl and has been climbing.
•               -The economy is booming, people are buying lots of things.
•               -Beginning of the year orders (processors buying to rebuild their depleted inventories) has been very robust.

All of these factors are driving home the fact that there is a real rally in the PP market and the price of it is definitely going up.  We also anticipate that a lot of grades are going to be difficult to find, like the higher melt copolymer grades, and that it is time to buy material now before you have to pay more next week for it.

The other market that has seen some pretty solid increases is ABS.  ABS pricing in the US has seen some increases since mid December, and most of those are trickling into the market.  I believe that you are probably seeing pricing $.04-$.06/lb higher than a month ago.  Overseas demand is a bit sluggish, but with the US roaring back after New Years, we are seeing a firm floor under pricing and it continuing to move higher.

If you have seen any other increases or heard of any other monkey business that is going on, please let me know.  The more I have the more I can help.

I wish all of you a very successful 2018, and looking forward to helping you make more money!