The Plastics Exchange reports that resin markets were a little more active with spot deals done across the spectrum of commodity polyethylene and polypropylene grades. However, there was no price movement this past week and spot prices remain steady to a little higher during this month. It is appearing more likely that producers will secure their entire $.04/lb polyethylene price increase in February. In addition, there is a lone $.06/lb increase nominated for March, while at least three other producers issued letters targeting the same amount for April. Polypropylene contracts shaved $.01/lb in Feb and might see another modest decrease in March, but there is still plenty of time and things could change. The export market is sluggish as international traders source better priced material from other regions.

The U.S. energy markets moved higher again and April rolled to the front month. April crude oil futures spent the entire holiday-shortened week in higher territory; the market settled at $102.20/bbl on Friday, it was a $2.07/bbl gain. Natural gas maintained its high level of volatility, transacting in more than a $1/MMbtu range. March natural gas futures, which are still very active, soared a whopping $.921/mmBtu to end the week at $6.135/mmBtu, the highest level since the summer of 2010. The April futures contract, which settled at $5.012/mmBtu on Friday, lags March by more than $1/MMBtu. The April/April Crude Oil: Natural Gas ratio expanded to 20.4:1. When considering the March Nat Gas price, the ratio is at just 16.6:1.

Spot ethane traded a little higher to end the week around $.4175/gal ($.176/lb). The spot ethylene market rallied, recouping about half of the previous week's losses. A couple crackers with production issues returned to manufacturing on-spec ethylene, while another unit experienced difficulties. The 2014 cracker maintenance season still lies ahead. Ethylene for February delivery rose from the get go and reached $.5275/lb by Thursday, the market then slipped a bit and settled Friday at $.515/lb, up $.015/lb. The forward curve is quite flat with less than $.01/lb separating monthly prices for the balance of 2014.

Polyethylene trading picked up a bit and prices held firm. Spot PE prices have been up around $.03/lb on average since the beginning of 2014, with variance by grade. There was a good flow of fresh railcar availability early in the week, but domestic offers seemed to dry up by Friday. While we are not seeing overly robust demand, processors have been seeking wellpriced material as an alternative to their contract purchases which have been invoiced up $.04/lb during February. As the month wears on it seems more and more likely that the entire increase will take hold. There is a fair amount of resin packaged in Houston; exporters are challenged to move high volumes of material offshore and are reluctant to take on additional inventory at current levels.

There was limited activity in spot propylene and the market was lightly pressured. A single transaction was seen for Feb PGP; it changed hands a shade below $.69/lb. The forward curve held its backwardated shape; prompt prices are currently the highest of the year and the market is priced to ease each month until about a $.0325/lb discount is afforded for December 2014. RGP activity was also tame and prices held around $.60/lb. Feb PGP contracts settled earlier in the month at $.735/lb, a cent below Jan. Based on recent spot levels and sans a significant production disruption, we foresee another modest decline in March PGP contracts.

Spot polypropylene trading was about average and pricing was steady this past week. Spot PP prices rallied $.03/lb in early Jan, but have since given back those gains and are now flat for this young year. Although there is not an over-abundance of fresh material, processor demand has slackened which has led to some accumulation of offers. Still, domestic asking prices have not eroded further and in some cases have firmed, so low-ball bids that are sometimes floated really seem out of line. After a $.08-.09/lb hike in contract prices between Dec/Jan, the $.01/lb decrease in Feb contracts left some buyers disappointed, but perhaps some more will come out in March.

Final thought from The Plastics Exchange CEO Michael Greenberg:

The commodity resin markets kept humming along; it was a relatively uneventful week that saw average volumes and steady prices. Houston traders and national resellers are firm when pricing their uncommitted inventories citing higher replacement costs and opportunistic sales due to others' logistics delays. With no producers breaking ranks late in the month, the $.04/lb Polyethylene price increase will likely find full implementation in Feb. While one PE producer nominated another $.06/lb increase for March, it doesn't have a chance first time around, but three other producers have now announced for April. While direct PE exports are likely still moving at a healthy clip, incremental exports through the secondary market are falling short. PP exports are a relatively insignificant factor. Feb PP contracts shed are now up $.03-.04/lb during 2014. There is one more week left go in Feb, let's end it with a bang!