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  Past Reports
Weekly Market Update
Market Update
February 20, 2015


The spot resin markets resumed trading Tuesday after the US President’s Day holiday, activity was then steady through the balance of the week. The flow of offers was lighter than the previous 4 weeks and prices for both Polyethylene and Polypropylene rose a cent across the board. Additional producers now seem to be decreasing Feb Polyethylene contracts by $.05/lb. February Polypropylene contracts are taking a small increase that should average around $.02/lb depending on producer and terms. International resin prices continued to firm, although the high volume export arbitrage is still generally closed, the Houston resin market is finding support.

The major energy markets were mixed in volatile trading, which appears to have become the norm. April WTI Crude Oil transacted on both sides of even-money and ended the week at $50.81/bbl, which was $1/bbl off the lows, but still a net loss of $2.86/bbl. April Brent Crude Oil gave back $1.30/bbl to finish the week at $60.22/bbl. April Natural Gas futures scored a second week of double digit gains, jumping $.16/mmBtu to $2.972/mmBtu. Spot Ethane added $.015/gal to $.195/gal ($.082/lb). Spot Propane fell fractionally to $.595/gal ($.168/lb).

The spot Ethylene market was fairly active, but well off the pace of the past few weeks. Ethylene for February delivery saw little change in price and ended the week at $.345/lb, down about a half-cent. Three gulf area crackers remain offline for maintenance, while the expanded Williams’ cracker is gearing up towards full speed. The Evangeline Pipeline is still shut, resulting in a $.10/lb premium for Ethylene in Louisiana. The Ethylene forward curve remains flat with material for delivery anytime during 2015 or 2016 currently priced at $.34-.35/lb.

Spot Polyethylene trading continued to hum along at a rapid rate. While there is still plenty of material available for prompt shipment in both bulk railcars and packaged truckloads, the volume of offers has diminished. We are seeing a level of consolidation in PE pricing; the domestic offgrade and prime export markets fell first and fast, dropping an average of $.20/lb (with variance by grade) from the Autumn high – each market recorded a small $.01/lb gain this past week. However, Polyethylene contracts are decreasing again; February’s $.05/lb drop will bring the total relief since November to $.16/lb. International resin prices, which are largely correlated to oil firmed when crude rallied; the markets remain jittery as volatility still runs high.

The spot Propylene market saw better business and several deals were done in a tight trading range. PGP for February delivery most recently changed hands at $.49/lb, a half-cent gain. Before stabilizing in mid-Jan, the spot PGP market had fallen precipitously losing some 30-cents/lb from Nov; it has since recovered a few cents. PGP contracts declined $.27/lb through Jan, but just squeezed out a small $.01/lb gain in Feb to settle at $.505/lb. The near-term outlook is currently fairly stable; the forward curve is slightly backwardated with very small decreases offered through December 2015, in total just $.02/lb. RGP was only lightly traded and remains in the low $.40s/lb.

The Polypropylene market continues to be best characterized by spotty and constrained supply with gently firming prices. Several PP plants are still experiencing production issues keeping overall resin availability snug. Contract railcar buyers do not complain of sourcing shortfalls; however, traditional spot buyers, who historically pick their moments and buy well, have more recently been challenged to find the right resin at the right price (we can help). Polypropylene producers have utilized the tight supply/demand dynamics to finally expand margins by several cents per pound over the past couple months. There are additional modest price increases floated through April; in the meantime, at least a penny or more increase will be implemented during February. Processors have been adding inventory buffers, taking advantage of the cheapest PP prices in more than 2 years.

The US Polyolefin markets, which often run together, are currently in different legs of their cycles. Polyethylene contracts are still falling and playing catch up to spot; the Feb $.05/lb contract decrease is helping to close that gap quickly. Polypropylene on the other hand has already washed out after about a $.25/lb decline; spot PP is now priced at or above contracts, which are taking a $.01-.03/lb increase in February. Although the recovery in Crude Oil has triggered a modest rally in international resin markets, even as US export prices continued to slide, the corresponding levels are now only parity at best. Considering freight and time, most exports still create a challenge; however, export sales to Latin American markets are seeing improvement.

Total Offers 18,190,280 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
HMWPE - Film3,105,336$.555$.635$.590$.630
HDPE - Blow Mold2,705,968$.535$.635$.550$.590
LLDPE - Film2,496,416$.565$.645$.570$.610
LDPE - Film2,282,208$.550$.640$.600$.640
PP Copo2,220,048$.670$.760$.690$.730
HDPE - Inj1,984,140$.555$.630$.580$.620
PP Homo1,979,956$.670$.740$.670$.710
LLDPE - Inj895,472$.540$.640$.620$.660
LDPE - Inj520,736$.675$.735$.640$.680
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