TPE resin pricing, Dec. 26-30: PE, PP steady; NatGas goes below $3/mmBtu

The resin markets floated quietly into year-end, with steady prices and few offerings, according to spot-trading platform, The Plastics Exchange (TPE). There were few new transactions completed in the holiday shortened week, and much of the market activity revolved around logistics, TPE noted, with market participants making sure producer railcars shipped ahead of the break and last-minute truckloads moved to processors. December polypropylene (PP) contracts fell $0.02/lb, while polyethylene contracts were not completely settled. PE producers were largely unavailable near the end of the year, but this month, TPE CEO Michael Greenberg noted that PE producers could very well start asking for the next $0.06/lb increase insinuating the December nickel is finally intact, although "large buyers will beg to differ."

Energy markets ended the year on a weaker tone, as February crude oil futures shed $0.85/bbl to finish the year at $98.83/bbl. February natural gas prices fell another $0.166/mmBtu, more than 5%, to close the year at $2.981/mmBtu, the lowest front month settlement since August 2009. The crude oil : natural gas price ratio expanded further to a new record of 33.1:1.

Ethylene spot prices moved higher, following the consummation of several deals, with the final transaction for December delivery concluded at $0.5325/lb, up just more than a penny. Material for January was sold a shade under $0.54/lb and then again at a $0.015/lb premium to December. All Gulf crackers ended the year in a fully operational state. However, there are several scheduled to be taken offline for maintenance during the first quarter of 2012. Ethane prices were up a couple cents to $0.81125/gal.

Polyethylene (PE) spot market activity nearly ceased as 2011 drew to a close. Spot PE prices were steady for the week and up about a penny during December. Fresh railcars were hard to come by, but a few reseller-owned cars were still seeking late month disposition. Producers invoiced PE resin sold on December contracts up $0.05/lb per their increase and have been relatively hard to reach during the latter part of the month, Greenberg noted. "Processors have gotten used to monthly rebates for those increases that have not held," Greenberg said, "but conversations in the beginning of January might instead include the additional $0.06/lb increase producers seek next."

Propylene remained under pressure as December came to a close, with refinery grade propylene (RGP) prices shedding another $0.005/lb to last trade at $0.38/lb. Spot polymer grade propylene (PGP) slid a cent, with the year's final transaction seen at $0.53/lb. PGP for January was priced at nearly a $0.02/lb premium to December. January PGP contracts have been initially nominated to increase $0.02/lb, but with the market falling, even the spot January price is now below December contracts, which settled down $0.02/lb to $0.56/lb.

Polypropylene's (PP) spot market was quiet, with very few deals completed over the last, holiday shortened week of 2011. Spot PP prices were steady for the week and the month; December contracts fell $0.02/lb and were down $0.22/lb during the 4th quarter. PP prices were pointed higher into January based on a rising forward curve for propylene; however, these feedstock prices have taken another leg lower and the curve has flattened somewhat, reducing the chance for upward movement in contract prices. Still, PP inventories have tightened throughout the resin supply chain, so large discounts for generic prime and/or offgrade might also be limited in the coming weeks.

Final thought from Michael Greenberg:

Wow, it is hard to write a market update after a holiday shortened week with little going on in the resin market! So how about we end it with our best wishes for a happy and healthy New Year - one that is filled with peace and prosperity for all. Let's see what January brings!