Following a five cents per pound reduction in price during 4Q 2016, one might expect there to be some deals to be had on the spot market leading into the 1st of the year. This year, however, resin manufacturers in the U.S. sold 2,800 rail car loads to China causing a brief, domestic shortage.
Here, it’s important to remember that the U.S. and all of North America produce resin utilizing abundant and cost-effective natural gas, whereas the rest of the world relies strictly on oil. Therefore, the global price disparity between the two fuels in the production of resin facilitated the purchase. Until the balance of supply comes back into order, a five-cent per pound price increase is anticipated on or about Feb. 1, 2017. If demand stays steady, it’s reasonable to expect this market price will stick; however, if the market senses any headwinds, there will likely be a downward value cost adjustment.