Market overview: The spot commodity resin markets were relatively slow as the 4th of July holiday approached. Since it was the end of the second quarter and most of June's business was already booked, many market participants took an extended holiday, according to spot-trading platform, The Plastics Exchange (TPE).
Polyethylene (PE) prices nudged a penny higher on Monday and remained there for the rest of the week.
Polypropylene (PP) prices rose $0.02/lb and are currently $0.03/lb above the June lows. The spot monomer markets dropped last week.
After a month of negotiations, June PE contract pricing finally settled, with high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE) down $0.06/lb, while low-density polyethylene (LDPE) settled $0.04/lb lower. TPE CEO Michael Greenberg said these declines could be considered a victory of sorts for processors, since producers had held firm late in the month, trying to relieve prices by only $0.02/lb less. Late in the week a PE producer announced a $0.04/lb increase for August on higher alpha olefins (HAO) LLDPE and LDPE resins, but as yet, others have not followed suit.
Ethylene for July delivery transacted up a half-cent on Monday to $0.36/lb, but fell the rest of the week. Spot prices were pummeled on Friday in active trade, ending the week at $0.30/lb, for a 15% loss. The June Ethylene net transaction price (NTP) was reportedly down $0.0525/lb from May, settling at $0.395/lb. Polypropylene contracts followed polymer-grade propylene (PGP) monomer lower, with both settling down $0.08/lb in June.
Propylene markets were quiet, as refinery grade propylene (RGP) shed a quarter-cent to $0.4275 and spot PGP once again went un-traded. Initial settlements for July PGP contracts emerged at $0.555/lb, which would be steady from June. Greenberg advised that if the current flat July PGP agreement solidifies market-wide, participants can expect PP contract prices to also remain steady in July.
Energy markets moved lower in the U.S. last week, as crude oil for August delivery tumbled $6.72/bbl to close at $72.14/bbl on Friday, while August natural gas futures prices continued fell $0.221/mmBtu to end the week at $4.687/mmBtu. The crude oil:natural gas price ratio shrank to 15.3:1.
Exports heated up some, with a number of European traders seeking PE at prices not seen for several weeks. As the dollar weakened, however, bids increased and a number of deals were concluded at prices $0.02-$0.03/lb above recent levels. Spot supplies of certain resins that had been plentiful, such as LLDPE Butene and HDPE blowmolding, began to tighten. Spot supplies of PP, both domestic and export, are significantly shorter than in recent weeks.
After rising $0.22/lb through April, PP contracts gave back $0.20/lb during May/June, for a net gain of $0.02/lb for the first half of 2010. Contract PE prices ran up $0.18/lb through March, held steady in April, and then dropped $0.12/lb in May/June. Average LDPE prices were down just $0.08/lb. Going forward, Gulf Hurricanes warrant attention and while Alex avoided the major petrochemical complexes, Greenberg cautioned that, "Other storms are already brewing and the season is still very young."