Plastics Recycling Update Magazine: Half year polyolefin market analysis

## Half year polyolefin market analysis


_By Editorial Staff, Resource Recycling_

Ongoing tension between polyolefin buyers and suppliers has yielded high market volatility in the first half of 2012.

**Polyethylene**: The push-pull between PE suppliers and buyers has been very furious in the past half year. Resin makers wanted a nickel price increase in December and market conditions warranted the price rise. Helping drive the move was low inventories throughout the supply chain. These conditions held as the new year began, when producers asked for six cents per pound more. Buyers pushed back, however, and many deals were made at December's pricing, or a little higher. Resin makers then again asked for six cents per pound more in February, but buyer resistance led to a three-cent price jump, with the remaining three cents sought in March. But a number of large buyers reportedly stocked up in February, thus easing price pressure. The rise in resin inventories throughout the pipeline continued into April, thus leading a price dip. The substantial amount of PE in the marketplace in May, along with declining ethylene prices, pushed prices down again in May by more than six cents per pound and June pricing fell by seven cents. Analysts expect an additional price dip in July.

**Polypropylene**: The polypropylene market has also been extremely volatile in recent months. Contract prices dropped two cents per pound at the end of last year as a result of tight supplies. Spot pricing then rose during the first weeks of January, with many orders moving at a five-cent-per-pound increase. But that was only a little bump compared to the February market. Skyrocketing costs of monomer forced PP makers to push PP prices higher by nearly 17 cents per pound. Resin market conditions then warranted an additional price increase in March of about five cents per pound due to an extremely under-supplied monomer market. However, many buyers then moved away from PP to other resins and PP inventories thus grew. This led to downward price pressure in the middle of the second quarter, followed by a steep price drop in the fifth month, when PP prices fell by more than ten cents per pound. Contract prices then fell by 15 cents per pound in June. Analysts are now saying that the market has flattened out because a large number of converters have increased their current resin orders because of remarkably attractive pricing.

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