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TPE North American resin pricing, April 26-30: PE down $0.01-$0.02/lb; PP falls $0.04/lb; ethylene in freefall; export window reopens

Overview: The spot resin market remained bearish last week, with prices still under pressure, according to Michael Greenberg, CEO of spot-trading platform, The Plastics Exchange (TPE). While limited supplies have been made available, market participants believe more material could be pushed through if needed. On the basis of soaring feedstock costs, resin prices had shot higher through mid-April, but have since collapsed along with spot monomers.

). While limited supplies have been made available, market participants believe more material could be pushed through if needed. On the basis of soaring feedstock costs, resin prices had shot higher through mid-April, but have since collapsed along with spot monomers. Polypropylene (PP) contracts had risen $0.22/lb in 2010, with $0.07/lb of that secured in early April. Polyethylene (PE) contracts were up $0.18/lb on the year, although producers were unable to implement their last $0.05/lb price increase.

Ethylene spot prices for April delivery plummeted $0.20/lb from their last transacted price, to $0.45/lb. Last week, the monomer dropped another $0.13/lb for May delivery. By contrast, spot ethylene had eclipsed $0.70/lb earlier in the month.

Propylene has stabilized, with refinery-grade (RGP) trading several times at $0.39/lb, which is still about $0.20/lb lower than prices earlier in the month. Spot polymer-grade propylene (PGP) last traded at $0.65/lb and remained offered at that level. April PGP contracts were up $0.07/lb to $0.755/lb, with May PGP contracts initially nominated to decrease $0.06/lb.

Energy markets: Oil and gas moved in opposite directions last week, with June Crude Oil futures $1.03/bbl higher to finish the week at $86.15/bbl. June Natural Gas futures fell sharply, giving back more than the previous week's gains to close at $3.92/mmBtu on Friday, down $0.423/mmBtu. The crude:natural gas price ratio expanded to 22:1; its widest spread since September 2009, according to Greenberg.

Polyethylene (PE) spot prices fell another $0.01-$0.02/lb last week, and prices are now down about $0.06/lb from the peak seen earlier in the month. Processors successfully staved off the $0.05/lb increase sought for April, but for the quarter, PE producers, with support from tight and expensive spot ethylene supplies, were able to push through $0.18/lb in price increases. The collapse in ethylene, however, has many PE buyers seeking price relief for May resin contracts.

Spot PE supplies have improved, but the market is not awash in resin, according to Greenberg. Some pure commodity resins, such as high-density polyethylene (HDPE) for blowmolding, are available, while other grades, like low-density polyethylene (LDPE) and some linear low-density polyethylene (LLDPE) film grades, remain difficult to find.

Lower prices and weaker sentiment has attracted international resin players seeking to export PE out of the U.S., with spot transactions concluded for both the European and Latin American markets at prices sharply discounted to the domestic market. Asian buyers have again begun to submit inquiries, but their bids were still well below asking prices.

Looking forward, after prices were flat in April, Greenberg believes producers will likely start May off by looking for the $0.05/lb increase that failed to catch April. Processors, meanwhile, seem likely seek relief given the drop in ethylene, perhaps targeting the $0.06/lb increase that was implemented in March.

Polypropylene (PP) spot prices continued to erode last week, dropping another $0.04/lb. The market has given back $0.15/lb from the highs seen earlier in April, and after 4 months of sharp cost-push increases pushed prices $0.22/lb higher, contract price relief seems imminent, according to Greenberg, as the spot propylene monomer market remains pressured.

May PP contract prices will surely be moving lower, but buyers have backed away from the market, minimizing their purchases as they wait to see how far prices could fall. Greenberg says the result has been a bit of a vacuum that's causing offers to accumulate and prices to fall. Widespec railcars are offered at sharply discounted prices while generic-prime railcars have been made available with sellers looking for bids.

Rapidly falling spot PP has re-attracted export interest that had been essentially shut out of the market for the past several months. Export deals for prime material have been concluded to Latin America, while fairly large quantities of low-end offgrade have reportedly been sold into Asia. "It seems that PP buyers will finally find some relief in May," Greenberg noted, saying TPE will continue to monitor the spot propylene market for a harbinger of what's to come. 

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