A series of events jarred the resin trading markets last week, including the attack on Saudi oil infrastructure and a flash flood near the heart of Houston-area petrochemical facilities. Many offers were pulled off the board in the wake of the Saudi event, but still others came to fill buyers’ resin needs, reports the PlasticsExchange (Chicago) in its weekly Market Update. While many participants were driven to transact, prices remained remarkably stable in the midst of this overwhelmingly bearish market cycle. These two surprise events should serve as a good reminder that our fragile resin supply chain could easily be disrupted, writes the PlasticsExchange, which encourages buyers to keep ample resin supplies on order and on hand.
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Polyethylene (PE) producers became emboldened in their effort to stem the slide in prices: The mostly $0.04/lb price increase was revised to $0.08/lb, but that, of course, comes into play after the current $0.03/lb increase is first implemented, which now appears to be a possibility. Polypropylene (PP) contracts will follow PGP monomer flat to a cent higher in September.
The spot PE market was very busy last week with no shortage of bullish news to drive trading activity, reports the PlasticsExchange. Completed transactions were above average, but still seemed a tad low considering all of the special circumstances surrounding these markets.
The week began with news of the attack on Saudi oil assets; by mid-week, producers revised price increase nomination to a total of $0.11/lb (in one case $0.12/lb) over the next two months. To cap it all off, tropical storm Imelda took Houston partially by surprise, causing flooding that resulted in ExxonMobil temporarily shutting down production at its Beaumont facility. Part of the tempered trading activity was caused by suppliers pulling offers while they waited to see where the market heads . . . in their view, higher. Despite the bullish news, this might all be perception, according to the PlasticsExchange, as large stocks of commodity resin are currently warehoused in Houston. Together with plenty of fresh U.S. production, supply is still more than ample to fill in short/mid-term blips.
Spot PE prices mostly remained flat this past week, except for linear-low-density PE butene, which was up a half-cent, and low-density PE film, which gained another penny as restricted supplies persisted. Revision letters were sent out to change October’s price increase from $0.04/lb up to $0.08/lb, which is piled onto the $0.03/lb already nominated for September. PlasticsExchange analysts believe the increase was put in place in case of a severe supply disruption, such as a major weather event or escalation to the Saudi attack, which would drive costs higher while crimping worldwide resin supply. International resin prices did get an upward push, as crude oil jumped and the risk of more war in the Middle East increased.
PP trading was strong again, as buyers were happy to access the spot market for attractive deals on readily available material. Fresh offers came in spurts and were sufficient to satisfy demand. The overall order flow at the PlasticsExchange trading desk was fluid and deals were completed without too much negotiation needed.
Completed volumes favored co-polymer over homo-polymer PP, and buy orders were evenly split between processors procuring railcars and other traders securing truckloads to cover late railcar shipments. Prices finished flat for the week with a friendly undertone for sellers, as warehouse delays and severe weather near production facilities in the Gulf create a premium for already packaged resin. September PP contracts will follow PGP monomer costs, which should conclude steady to a penny higher.
Read the full Market Update on the PlasticsExchange website.