TPE North American resin pricing, Dec. 6-10: PE down $0.01/lb; PP up $0.02/lb; ethylene falls $0.05/lb

Market overview: The spot resin markets saw good activity last week, with volatile prices and an overall increase in availability. Polyethylene (PE) rallied early in the week before ultimately shedding a penny, while polypropylene moved steadily higher, finishing with a $0.02/lb gain. December contract prices remained undetermined, but spot-trading platform, The Plastics Exchange (TPE), stated that PP contracts will likely settle up $0.03/lb, in tandem with polymer grade propylene's (PGP) increase. PE contracts seemed less certain, with weak spot ethylene prices possibly delaying implementation of the producers' proposed December $0.05/lb price increase. At this stage, however, all producers are holding firm.

Energy markets traded in opposite directions, but reversed the previous week's activity, with January crude oil futures coming off two-year highs to finish at $87.79/bbl on Friday, down $1.40/bbl. January natural gas futures added $0.067/mmBtu to end the week at $4.417/mmBtu. The crude-oil:natural-gas price ratio eased slightly to just under 20:1.

Ethylene spot trading was "swift", according to TPE CEO, Michael Greenberg, as the market started giving back some of the hefty gains achieved in November. Despite continued operational issues, bids were seemingly hit as sellers unloaded material throughout the week. Prices dropped consistently with the week's final trade at $0.455/lb, for a weekly loss of about $0.05/lb.

Polyethylene (PE) was stronger early in the week, but when offers began to flow, prices eased as spot monomer dropped. Overall spot PE prices dropped about $0.01/lb for the week, a relatively modest decrease, but one that ultimately could be considered significant given the steep uptrend and $0.05/lb contract price increase currently on the table. Resellers put forward fresh railcar offers, as many of the were reluctant to add to inventories at this level. High-density polyethylene (HDPE) blowmolding has become more available, as has linear low-density (LLDPE) film grades, while spot low-density (LDPE) supplies have increased, and prices remain lofty. HDPE injection and film grades are still scarce, according to TPE.

Propylene continued to see gains, with refinery grade propylene (RGP) prices jumping $0.045/lb to last transact at $0.56/lb. Early in the month, polymer grade propylene (PGP) settled at $0.605/lb, for a $0.03/lb gain. Spot PGP did not trade last week, but the last time it changed hands, it did so at $0.65/lb. Greenberg noted that swing crackers are consistently choosing light feedstocks, like ethane, which is limiting propylene production and pushing markets into short supply.

Polypropylene (PP) spot prices remain strong, adding another $0.02/lb this past, which pushes them up more than a nickel in the past month. Producer railcar offers are very scarce, but material has appeared in Houston. Weaker PP prices in Asia have generated cancelled orders, putting some material back on the market. Domestically, PP prices could still go higher, as spot PGP monomer is priced well above contract, and traders are already talking about a January PGP increase.

Final thought from Michael Greenberg:

"Limited supplies and rising monomer prices have been the key drivers to the recent bull run in commodity resin prices. The spot propylene market is still strong, reinforcing the $0.03/lb PP price increase and then some. However, spot ethylene prices have begun to unwind, threatening the timely implementation of the current $0.05/lb PE nomination. December usually brings excitement as players along the supply chain square up their year-end inventories, with a keen eye already peering into the new year's market."