September tightened PE and PP supply. Here's the argument that replaces "nothing has changed" on your October and November letters.
Last week, Resin Market Moves gave buyers two questions for every increase letter: Is the cost real? Has supply tightened? This week, the second answer flipped for polyethylene and polypropylene. Michael Workman explains what that does to your leverage.
- Polyethylene: Producers are pushing up to 7¢/lb, and September inventories drew down sharply as sales outpaced production. "Nothing has changed" no longer works. But one month isn't a trend, with exports softer and Golden Triangle's new capacity coming online. Negotiate how big, how fast and what protects you in November, and don't lock forward volume at announced prices.
- Polypropylene: Nothing proposed for October, but LyondellBasell and TotalEnergies have announced 3¢ for November. Lake Charles is offline into November and two more producers expect downtime in Q4. Confirm your September decrease and place October volume before the calendar turns.
- Polystyrene and nylon: The October benzene contract finalized about 80¢ above September, and spot rose another 25¢ this week. On nylon 6, the asks run from 14¢ to 20¢ against the same benzene. That spread isn't feedstock. Pay the real part and challenge the rest.
- ABS, PC, PET and PVC: Costs are climbing on the first three, but no letters yet, so don't volunteer. PVC buyers have the market. Hold, and ask for a decrease where your contract allows.
He closes with the rule for the week: when the answer changes, change the argument.
Michael, Kevin Mekaru and Riley Olsen are walking PACK EXPO International at McCormick Place in Chicago this week. If you're there, bring your October letters. Email mworkman@rtiglobal.com to find a time.
Chapter markers:
- 00:00 The supply answer changed
- 00:24 ResinSmart at PACK EXPO
- 00:52 Polyethylene
- 01:42 Polypropylene
- 02:26 The benzene chain: PS and nylon
- 03:22 ABS, PC, PET and PVC
- 03:54 Change the argument
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