The Plastics Exchange resin prices for Feb. 24-28: Quiet end to the month

. Anecdotally, most major domestic resellers seem to have posted similar results. Business was off a bit more for the Houston exporters, as higher costs often rendered their asking prices uncompetitive in the global theater. Almost all grades of spot polyethylene were up $.01/lb this past week. The $.04/lb PE increase was implemented on February contracts and most producers have nominated another $.06/lb, but not until April. Spot PP prices were flat again; contracts shed a cent in February and will likely see a similar or slightly larger decline in March.

The U.S. energy markets moved in opposite directions. Crude Oil traded in a narrow range of less than $2.50/bbl. The April futures contract ended the week at $102.59/bbl; it was a small $.39/bbl gain. April Natural Gas futures were much more volatile. The market initially continued to rally, jumping another $.20/mmBtu Monday morning, but prices proceeded to collapse from there. The market did recover did some $.15/mmBtu from Friday's low, but when the dust settled, the price stood at $4.609/mmBtu, a $.403/mmBtu loss. The Crude Oil: Natural Gas ratio expanded to 22.2:1.

Spot ethane prices fell substantially, ending the week around $.33/gal ($.14/lb), almost a $.09/gal loss. Spot ethylene prices were higher in active trading. Ethylene for February delivery transacted quite a number of times, initially a tad lower - under $.51/lb and then spent the rest of the week in slightly higher territory. The final February transaction for the week and month was $.52/lb, just fractionally higher. Ethylene for March delivery was generally priced with about $.005/lb premium to Feb and most recently changed hands at $.525/lb. There were at least two cracker production disruptions, one was benign and the other could take a little longer to resolve. The forward curve remained fairly flat; all months for balance of 2014 are priced within a penny.

The spot polyethylene market was mostly higher in moderate trading. Prices were up $.01/lb pretty much across the board with the lone exception of LDPE film which was steady again - resellers still seem to be working through old inventories. Nonetheless, producers have pricing power and were able to fully implement their $.04/lb price increase in February. However, there was a surprisingly large number of reseller owned railcars that still required disposition late in the month, which can be interpreted as a sign of weak domestic demand. Houston traders also have plenty of material to sell, but their asking prices have been rising along with replacement costs, making exports a challenge. Some time ago, a single producer issued a $.06/lb increase for March, others did not follow, but most have now nominated a $.06/lb increase for April.

Spot propylene activity picked up a little, there were several transactions seen and the refinery maintenance season has begun. PGP for February delivery only traded early in the week and most recently at $.68/lb, fractionally lower. March PGP was busier and more recently changed hands a shade above $.695/lb, a tad higher for the week. The

forward curve steepened its backwardated shape; March is currently the highest price of the year and discounts are provided through the end of 2014; December marked about $.04/lb below prompt. Feb PGP contract were down $.01/lb and a nomination for March has been seen down another $.01/lb.

Spot polypropylene availability increased and the offgrade market was softer, but our benchmark Generic Prime prices held firm again this past week. The spot market had previously given back the expanded premium that Generic Prime had fetched earlier in the year, so current asking prices already represent fairly thin margins over feedstock costs. PGP monomer is offered down $.01/lb for March, but is still up a net $.07/lb over the past three months through Feb and processors would like to see a larger break for March. If PP contract orders start to fall short, monomer could be vulnerable and then March contracts would come off a little bit more, but we do not foresee more than a few cent slide.

Final thought from The Plastics Exchange CEO Michael Greenberg:

Spot commodity resin trading was relatively uneventful the final week of February. Perhaps the most notable fundamental was an accumulation of offers to create the best overall material availability of both PE and PP so far this year. While polyethylene contracts did take the full $.04/lb increase in February, and most PE grades added a penny to reflect such, there is no viable increase on the table until April and bullish sentiment seems to have waned just a tad. PP contacts shed a cent in Feb and should see further, but modest relief in March; domestic demand could be critical here as export markets at this price level are insufficient to clear burdensome inventories should they develop.