TPE resin prices, June 10-14: PE, PP up $0.02/lb; Plant explosion rocks ethylene market

Spot polyethylene prices were weak and shed a penny before yet another petrochemical plant explosion, after which they subsequently jumped a couple cents on average, ending higher by Friday; spot polypropylene prices, meanwhile, continued to rise, adding $0.02/lb last week. Spot-trading platform The Plastics Exchange reported that the explosion at the Williams complex in Geismar, LA, led it to declare Force Majeure on ethylene. June PE contracts are "up in the air" mid-month, according to TPE, which noted that processors' hopes for relief might again be stymied. "The implementation of the $0.04/lb increase is also not necessarily likely," said TPE CEO Michael Greenberg. Spot polypropylene prices continued to rise, adding $0.02/lb. Polymer grade propylene (PGP) contracts, meanwhile, began to settle with an increase of $0.03/lb, which would be on the higher side of expectations.

TPE resin prices, June 14, 2013

Energy markets continued their recent trends, as July Crude oil futures rose $1.82/bbl to $97.85/bbl, a 9-month high; and July natural gas futures fell further to settle at $3.733/mmBtu on Friday, a loss of $0.095/mmBtu. The crude oil : natural gas ratio moved out to 26.2:1. Ethane prices fell a sharp $0.03/gal to $0.23/gal ($0.097/lb).

Ethylene spot prices began the week under pressure sliding a couple cents to $0.51/lb, but then regained the losses by Wednesday transacting at $0.535/lb. The market then shot much higher after the Williams' Louisiana petrochemical plant had an explosion and fire, while several other crackers remain offline for maintenance. By Friday a Force Majeure was issued and ethylene for June delivery reached as high as $0.60/lb before easing a cent to end the week at $0.59/lb. That makes for a huge $0.06/lb net gain. Prices for the balance of the year also rallied, but not as much as the nearby months, and the curve steepened, sending prompt months to a $0.05/lb premium over December 2013 values.

Polyethylene (PE) spot prices began under pressure, but snapped back higher to end with week with net $0.005-$0.01/lb gains. Spot supplies were generally ample and demand was soft, but the market was disrupted late in the week by feedstock issues. Despite producers' third attempt to implement their $0.04/lb increase, all signs were pointing towards a contract price decrease in June. "However, similar to May, mid-month monomer mayhem sent spot ethylene prices soaring and resin suppliers pulling well-priced offers off the table awaiting market clarity," Greenberg said.

Propylene saw moderate spot trading activity, and the handful of transactions that concluded were all lower for the week. PGP was range bound between $0.62-$0.62.5/lb. The most recent trade was done right in the middle, down $0.0075/lb. Williams' petrochemical plant which experienced an explosion produces just a nominal amount of PGP while Petrologistics PDH unit, which makes a meaningful supply, is briefly offline for maintenance and deemed more disruptive. June PGP contracts began to settle up $0.03/lb to $0.66/lb, on the upper end of the range. The forward curve is backwardated to the extent of $0.025/lb basis December 2013.

Polypropylene (PP) spot prices continued to press higher as good demand chased production-challenged supplies. June PP contracts began to settle up $0.03/lb, pricing prime railcars in the middle to high $0.70/lb and above. Average spot PP prices gained $0.02/lb as buyers sought offgrade and generic prime alternatives, providing good support to those markets. U.S. PP prices have sprinted ahead of international markets, limiting export opportunities.

Final thought from Michael Greenberg

Petrochemical market participants are well-familiar with unplanned outages, but the consistent flow of disruptions seen in 2013 are starting to add up. Polyethylene prices were soft early last week and contracts seemed to be headed lower in June, but found support from the most recent Williams outage. Polypropylene markets continued to trend higher, with spot adding a deuce this week and contracts jumping three cents. PP processors have been restocking inventories the past couple of months, and we are starting to see buyers balk at the high PP prices.