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Polyethylene was steady and polypropylene continued to firm adding a penny, last week as the spot resin markets slowed. Spot-trading platform, The Plastics Exchange (TPE) noted that there was a consistent but not over-abundant flow of material. Spot monomer costs eased, which sapped downstream plastics buyers' enthusiasm, so after several weeks of strong purchasing behavior, demand was off, according to TPE. May polyethylene contracts could be mixed, despite the $0.04/lb increase nomination.

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TPE resin prices, May 20-24: PE steady; PP up $0.01/lb; May PE contracts mixed; PP contracts slip $0.01/lb

Polyethylene was steady and polypropylene continued to firm adding a penny, last week as the spot resin markets slowed. Spot-trading platform, The Plastics Exchange (TPE) noted that there was a consistent but not over-abundant flow of material. Spot monomer costs eased, which sapped downstream plastics buyers' enthusiasm, so after several weeks of strong purchasing behavior, demand was off, according to TPE. May polyethylene contracts could be mixed, despite the $0.04/lb increase nomination. Most producers just tried to hold the market steady, but some might relinquish 2-cents for LDPE and LLDPE. May PP contracts shaved a penny and now sit just $0.04/lb higher for 2013.TPEresinpricesMay24.jpg

TPE resin prices, May 24, 2013

Energy markets again went separate ways while July rolled to the front month contract. Crude oil futures were generally under pressure while trading in a wide $5/bbl range. The July contract ended the week at $94.15/bbl down $2.14/bbl. Natural gas futures recovered further, adding $0.171/mmBtu to settle at $4.284/mmBtu on Friday. The crude oil: natural gas ratio contracted to 22:1.

Ethylene spot prices fell in busy trading, as the market moved lower from the get-go and proceeded to slide all week, according to TPE CEO Michael Greenberg. The weakness is significant in light of several minor production disruptions; some crackers remain offline for either planned or unexpected maintenance. Ethylene for May delivery ended the week just below $0.55/lb, a loss of $0.04/lb. While the entire forward curve was marked lower, the bulk of the losses were seen in prompt months. The curve remains backwardated but now just $0.03/lb separates the current market and the cheaper December prices. Ethane gained about a half- cent to $0.2875/gal ($0.121/lb)

Polyethylene (PE) trading slowed, and buyers backed away from the market amid contract uncertainty and falling spot ethylene prices. "May contract negotiations have been tricky," Greenberg noted, explaining that although there was a $0.04/lb increase still on the table since April, the timing seemed right for some relief from the $0.09/lb increases tacked on during January and February. However, several unplanned cracker outages contributed to a sharp mid-month monomer rally and Force Majeure situations for HDPE - firming the market. "When the dust settles, HDPE contracts will likely stay steady, while softer LDPE and LLDPE markets could still see $0.02/lb relieved in May," Greenberg said, adding that "not all producers are on board with a decrease."

Propylene spot prices still slipped a bit amidst limited trading activity. Most of the week's action was focused on the prompt months and May polymer grade propylene (PGP) last transacted a shade under $0.60/lb, down about a penny. The spot market remains in close vicinity to May contracts, which settled early in the month at $0.62/lb, down a cent from April. The current outlook for June is again for a small change, if any. The forward market is fairly flat with less than a $0.015/lb discount afforded for PGP in December 2013. Refinery grade propylene (RGP) has snugged up into the mid $0.50s/lb.

Polypropylene (PP) trading activity remained elevated, and processors continued to procure material for both current needs and in some effort to rebuild stocks. While Generic Prices edged a penny higher last week, larger gains were seen in offgrade, which continues to strengthen. "Prices in the lower $0.60s/lb are now history and availability in the mid-higher $0.60s/lb is becoming scarce," Greenberg said, adding that after several months of poor spot margins, producer netback has improved. At 4% of total sales, exports are still a small part of the overall PP picture, but they have recently helped support to the lower end of the market. May PP contracts were down just $0.01/lb, and TPE expects minimal movement again in June.

Final thought from Michael Greenberg

Although there was very little movement in May resin contract prices, it was generally a busy month for spot. The PP market really cleaned up, with the sharp spot discounts disappearing as the days marched on. Unplanned cracker outages led to Force Majeure situations for HDPE - and a scurry for material; this supported the spot market and kept the contract market from sliding. Some LDPE and LLDPE buyers might see $0.02/lb relief from various producers, which could become more widespread in June. There have been sporadic surges in spot exports, but not constant the type of buying seen when the arbitrage is wide open.

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