The spot resin market saw only average trading for the second week in a row, well off the high level of activity seen during the first half of the month. Average prices for both polyethylene and polypropylene were also flat once again. April contracts seem to be rolling steady for PE and down a cent for PP. Resin availability in both bulk railcars and in packages mostly remains ample, although to a certain extent traders have managed to trim their heavy inventories. Export markets are seeing some improved activity; smaller volumes are changing hands, while large transactions are still usually disabled by price.
The major US energy markets gave back some of their recent gains. June crude oil futures shed a sizable $3.70/bbl to settle Friday at $100.60/bbl. Natural gas futures saw little price change through Thursday, but then ended the week on its lows. The June futures contract dropped a net $.094/mmBtu to settle at $4.647/mmBtu.
The crude oil: natural gas ratio remained around 21.6:1. Spot ethane traded in a tight range and ended the week down a half-cent at $.295/gal ($.124/lb). Spot propane gave back the previous week's penny gain reverting to $1.11/gal ($.315/lb).
The spot ethylene market continued to see very active trading and the entire curve moved significantly higher on heavy volume. One cracker returned to operation after completing its maintenance while another came offline, there are at least four units currently down for scheduled turnarounds and unscheduled repairs. Ethylene for April delivery initially transacted a handful of times at $.54/lb, which was steady and then surged from there. By the end of the week, it had rallied all the way up to $.57/lb, trading at many prices along the way. It was a net $.03/lb gain. May ethylene is priced similar to April, but then the monthly discounts kick in until December prices down to around $.545/lb - a penny steeper than the previous week.
Spot polyethylene prices were flat amid generally steady demand and mostly ample supplies. HDPE for injection and blow molding could be deemed plentiful. However, certain grades including LLDPE for film have become a bit scarcer and the higher alpha olefins have begun to re-take a larger premium to butene. While there is plenty of Liner grade in the market, spot LDPE high clarity has also become more difficult to find. Export interest has picked up a bit and bids have risen to enable smaller transactions, but large export deals remain elusive. Polyethylene producers seem to have withstood processors' calls for a price decrease in April.
Spot propylene saw limited activity and prices eased slightly. PGP for April delivery transacted several times at $.685/lb, which was down a half -cent. While there were bids/offers shown, there were no transactions seen in the forward market. Still, the curve steepened a little bit with each month shown progressively cheaper until a $.03/lb discount is seen for Dec 2014. April PGP contracts settled earlier in the month down $.01/lb to $.71/lb; a nomination has been floated to roll over the same price for May. Spot RGP traded on both sides of $.60/lb, most recently under.
Spot polypropylene trading was tepid and prices held firm once again. There was a good flow of mostly offgrade railcars while trader supplies in Houston and around the country have been diminishing. Although processors were hoping for a sizable contract price decrease in April, only a penny was relieved. After several months of slack demand, buying seemed to pick up a bit as many processers' inventories had been worked down to uncomfortable levels. Still, the buying remains on an as-needed basis rather than for a substantial rebuild of downstream resin stocks. PGP has been suggested to roll flat for May, we will see if processors can continue to hold out since a large decrease does not appear forthcoming.
Final thought from The Plastics Exchange CEO Michael Greenberg:
The spot resin markets were very busy the first half of April, but then slowed to an average pace the second half of the month. There was ultimately very little spot price change in April and contract movement was also benign - a penny came off in PP and PE seems to be flat. I was in Shanghai for Chinaplas for a few days last week, the show was booming and the general business mood was very optimistic. For the past few months, Asian trader inventories had been overly burdensome thus capping prices, but stocks are being worked down and there is talk of rising resin prices to come in that region. However, there is still a price gap to close before the US market will feel sizable renewed spot export demand.