. Buyer activity was also solid, but processors are mostly picking away with minimal volume as they anticipate even cheaper prices ahead. There is a very wide range of prices quoted in the market; resellers are looking to minimize losses when selling off high cost inventories, but will generally accept a reasonable offer in order to move the material. Processors are rapidly dropping bids and leading the market lower and while unreasonably low-ball bids are not workable, very sharp prices for certain grades could be do-able if there is patience for fresh railcars to deliver or hit the warehouse for packaging.
Energy markets continued to trade in an extremely volatile fashion and ended the week just mildly mixed, while March rolled to the front month. WTI Crude Oil swung in a 14% range; a strong rally on Friday helped the March futures contract eke out a small weekly gain of $.14/bbl to $49.13/bbl. March Brent Oil moved around in a $6/bbl range, shedding another $1.13/bbl to end the week at $50.17/bbl. Natural Gas had a huge range, almost 18% as it recovered $.14/mmBtu to $3.087/mmBtu. Spot Ethane added about a cent to $.20/gal ($.084/lb). Spot propane firmed $.035/gal to $.49/gal ($.139/lb).
Spot ethylene was actively traded and prices continued to lose ground. Ethylene for January delivery initially transacted around $.36/lb, down nearly $.02/lb, however, there were then several cracker disruptions, both planned and unplanned, which contributed to the market firming as the week wore on. At one point prompt ethylene recovered its losses before finally ending the week back on a down tick, shedding a net cent or so, last trading a shade below $.37/lb. The Evangeline Pipeline shut down again causing ethylene in Louisiana to transact around a dime premium versus the benchmark in Mont Belvieu, TX. The forward curve is fairly flat for the next several months, but then prices begin to fall off to generate a $.02/lb discount by Dec. 2015.
Spot polyethylene trading ramped up to full force as January reached mid-month. Offers for most commodity grades were plentiful and prices continued to erode; LLDPE and LDPE grades fell about $.01/lb, while HDPE lost as much as $.03/lb. January polyethylene contracts are offered down $.04/lb; they have not yet settled and the decrease could potentially be larger. Although the polyethylene market has been in a virtual freefall, if supply chain issues continue to develop, they could help stem the slide-in the meantime the market is still very bearish. In an effort to liquidate burdensome inventories, fresh polyethylene railcars were sold into the Houston market at very steep discounts, cheap enough to enable sizable exports.
Spot propylene was only lightly traded and prices fell further. PGP for January delivery only transacted a couple times while sliding another cent to $.46/lb. Jan PGP contracts are settling down a sizable $.12/lb to $.495/lb. While the loss is large, the settlement is in line with the typical relationship seen between spot and contract prices. The PGP forward curve is slightly backwardated to the tune of $.015/lb by Dec 2015.
Polypropylene trading was good, prices continued to fall sharply even though spot supplies are still somewhat snug. While some grades are a challenge to find in the spot market overall availability is improving. Generic Prime polypropylene lopped off another $.04/lb this past week as propylene monomer contracts settled down $.12/lb, which was more than initially nominated. Polypropylene producers have been very disciplined by throttling back reactor rates to limit resin production in support of their effort to expand margins, still Jan. PP contracts should see at least a $.10/lb decrease. Monomer contracts have dropped $.27/lb since November and during this some resin contracts have likely only relieved $.23-.25/lb. As more contracts shift away from the absolute correlation with monomer costs, we expect some increased opacity amongst industry prices.
Final thought from The Plastics Exchange CEO Michael Greenberg:
Spot resin trading was swift, continually falling prices are welcomed by processors, who for a change are sitting snugly in the driver's seat. January contracts for both polyethylene and polypropylene are dropping for the third straight month as much cheaper energy and feedstock costs work their way downstream. While domestic resin prices could still have more downside, material sold to Houston for export has fallen fast and is quickly becoming competitive with international markets to spur export demand. For now, maintaining negative sentiment for the spot resin market is warranted.