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  Past Reports
Weekly Market Update
Market Update
October 14, 2016


The spot resin markets were a bit slower this past week, affected somewhat by the Columbus Day and Yom Kippur holidays. There was a limited number of fresh prime PE and PP railcar offers, but we still had a consistent flow of offgrade material. Resellers, both in Houston and around the country, continued to make their prime warehoused inventories available, aiding spot market liquidity. Polyethylene prices were mildly mixed, with some premium adjustments seen between grades. Spot Polypropylene prices moved moderately higher. Export interest for both PE and PP remained stronger than we had seen during Sept, which had sagged.

Most major energy markets continued to rally. Nov WTI Crude Oil futures closed above $50/lb every day of the week, ending Friday at $50.35/bbl, a gain of $.54/bbl. Dec Brent Oil rose just 2-cents to $51.95/bbl. Nov Natural Gas rallied further, adding nearly a dime to end the week at $3.285/mmBtu – a new high close for the contract. Ethane gained $.015/gal to $.255/gal ($.107/lb) and Propane was up a cent to $.58/gal ($.164/lb). Ethylene began the week higher and then fell sharply, even piercing below $.30/lb, which is where it most recently changed hands - it was a sharp net loss of nearly a nickel. Spot PGP for prompt delivery saw little activity and was offered down about a half-cent, to $.395/lb; however, the forward market was active and prices were marked down significantly.

Polyethylene trading was notably lighter than it was during the past several weeks. There was a little lull in producer offerings this week, but not enough to alter market sentiment, which remains slightly negative from this price point. There was previously a good flurry of activity as some processors had run their inventories down and had to restock. Resellers, commenting that Sept sales were disappointing and feeling that the market has become fully extended to the upside, have sought to sell-off a portion of their uncommitted resin stocks.

Houston traders and exporters are also seeking to pare down inventories as offshore sales have been weaker than anticipated, so fairly priced buyer bids are being hit. Although spot buying from international traders has recently been improving, PE exports disappointed in Sept, it was the lowest tally in 20 months. The resurgence in export demand will be critical in order to maintain a balanced market as PE capacity expands and production increases.

We are currently seeing a wide range of Polyethylene prices, which creates good spot opportunities. Domestic prime railcar offers are holding at levels to include last month’s nickel increase, while the discount afforded on offgrade railcars is growing. After 2 months of reduced resin production, upstream PE inventories are relatively light, which has kept the market firm, even at this lofty level. Although some PE producers are still dealing with production constraints, now that the increase has been implemented, and cracker / reactor issues are resolving, spot prices could slip. However, we believe the recent nickel increase will remain intact this month.

The Polypropylene market slowed from its active pace and trading volume was only considered about average. PP production was finally reduced in September, largely due to planned and unplanned reactor maintenance; we are just now starting to see a lighter flow of railcar material. While overall resin availability remains ample, processors continue to pick away at resellers’ aged inventories, which have been the lowest priced material in the market. As offers are purchased, reseller asking prices are lifted slightly higher; consequently, HoPP gained a half-cent this week; CoPP was up a full penny.

While the volume of material available in the spot market could not nearly satisfy contract demand, its relatively low price level is indicative of oversupply and weighs on buyers’ sentiment. This in turn affects processors’ inventory ideas and their short / mid-term demand. Spot PP supplies are again thinning and another month of reduced PP production, which appears to be occurring, could help tip the supply/demand balance back towards tight – or at least less loose. This would certainly help producers raise contract (and overall) prices again in Oct to help offset their $.06/lb PGP monomer increase taken in Sept, still squeezing margins this month.

Total Offers 14,825,436 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
PP Copo3,534,624$.510$.595$.500$.540
LDPE - Film2,170,944$.600$.720$.640$.680
PP Homo2,063,956$.485$.540$.480$.520
HMWPE - Film1,980,944$.520$.620$.540$.580
HDPE - Inj1,425,196$.520$.610$.530$.570
LLDPE - Film1,303,840$.570$.630$.540$.580
HDPE - Blow Mold966,828$.540$.590$.525$.565
LLDPE - Inj732,736$.590$.620$.580$.620
LDPE - Inj646,368$.610$.675$.595$.635
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