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  Past Reports
Weekly Market Update
ThePlasticsExchange.com
Market Update
November 20, 2020

Summary

Spot resin trading slowed; material availability continued to improve, though overall supplies remained tight and transactions were generally challenging to complete. Processor inquiries continued to flow into our trading desk, but differences in participants’ pricing ideas and outlooks kept volumes from reaching even average levels. Buyers were unenthusiastic and most of our orders were for truckloads rather than railcars. Many processors have held out hope for a significant yearend price break from late October highs, while resellers have been reluctantly restocking at still lofty levels, and in some cases, paying their highest cost during this entire market cycle. Adding to the buyer hesitation is a lurking Covid 19 resurgence, with some states potentially moving towards another complete shutdown. Despite the spike in cases and potential stay at home orders the financial / commodity markets, resin included, are acting less panicked and more resilient than during the spring. Polyethylene prices were mildly mixed this past week and we expect producers to give their $.05/lb increase a third try in December. Spot Polypropylene gained another penny and could be heading higher as producers dig in to implement margin enhancing increases for both Nov and Dec. Resin demand from China has picked up, adding some renewed pep to the export market.

Spot Polyethylene trading was less fluid than the previous week, activity slackened ahead of the upcoming Thanksgiving holiday and deals were difficult to put together. Despite production rebounding from summer/early fall shutdowns, pockets of hard to find materials still exist, including LLDPE Octene, HDPE for Dairy and especially higher flow LLDPE in both pellet and granular forms, which added a penny this past week. Other grades have become more available such as HDPE for injection and especially HMW for film, which slid a cent. The new Sasol / LBI LDPE plant also finally began production, but it will take time before Prime resin is available. PE producers tacked on $.19/lb of increases from June through Sept and to date have not been able to implement their outstanding $.05/lb, but will take a third crack at it in December. Logistics costs remain elevated and we expect trucking to be strained in the holiday week ahead as many drivers seek lanes back towards their home bases. Warehouses will also be keeping shorter hours, so please plan ahead when possible.

Spot trading in Polypropylene was good, but not great. While a fair amount of resin changed hands through our trading desk, demand exceeded supply leaving many orders unfilled, and prices for HoPP and CoPP gained a penny as a result of the imbalance. Of the completed deals, Prime truckloads were the main mover, with low-mid melt HoPP leading the way, mostly based on availability, with mid-melt CoPP trailing closely behind. More common grades of Prime and offgrade CoPP can now be found, although they are still challenging. High volumes of high flow CoPP and Random Clarified would have traded if more reasonably priced material was available. Upstream PP inventories remain at the lowest levels since we began tracking fundamentals 15 years ago, so tightness persists. November Polypropylene contracts will rise at least $.02/lb based on cost-push pressures and could conclude with a larger gain as producers seek to enhance this month’s margins by $.04/lb; they have also announced another $.04/lb increase for December, beyond the change in PGP.

Spot monomer market trading slowed a tad, volume still ran about average and prices advanced. Ethylene bids materialized Monday morning and Nov material changed hands at $.2025/lb, lifting the market by $.015/lb. On Tuesday, Nov Ethylene located in Louisiana sold at $.215/lb. An additional deal for future delivery in LA was seen the following afternoon before traders reverted their geographical needs back to TX, where a transaction for Dec/Jan settlement was completed. Late Friday, Ethylene for Dec delivery transacted a couple more times and spot Nov Ethylene finished the trading week almost $.02/lb higher, settling at $.205/lb. Most of the deferred months saw loses of nearly $.02/lb and the forward curve moved into a backwardation. Propylene saw a decent flow of market inquiries throughout the week, but overall visible volume was low as spot agreements were difficult to come by. Participants were able to match up deals on Tuesday and a few on Friday, all for future delivery. By the end of the week Nov PGP was seen around $.38/lb, minor losses were noted in forward months and the curve flattened. Contract negotiations concluded and after finishing up a half-cent in Oct, Nov PGP contracts added $.02/lb to settle at $.385/lb.

The major energy markets continued to trade in a very volatile way and prices ended sharply in opposite directions. WTI Crude Oil rolled to January and started with strength, the rally gained some momentum through the week and the market ended Friday at $42.42/bbl, up $2.02/bbl. Brent Oil again slightly outperformed to the upside, the Jan futures contract gained $2.18/bbl to $44.96/bbl. The air has officially come of out the Natural Gas sails as the Jan futures contract was rocked by another week of sharp selling. The winter premium has mostly eroded as the Jan contract dropped another $.352/mmBtu to $2.77/mmBtu, reverting back to month ago levels. Ethane lost $.023/gal, about 10%, to end the week at $.202/gal ($.085/lb). Propane dropped $.038/gal to $.51/gal ($.146/lb).

Total Offers 12,335,616 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
LLDPE - Film2,445,944$.450$.530$.440$.480
PP Homo1,846,472$.570$.660$.600$.640
LDPE - Film1,692,760$.540$.600$.560$.600
HDPE - Inj1,453,576$.470$.530$.460$.500
LLDPE - Inj1,278,196$.580$.680$.590$.630
PP Copo1,086,552$.630$.730$.650$.690
HDPE - Blow Mold1,052,644$.480$.550$.490$.530
HMWPE - Film833,380$.480$.540$.470$.510
LDPE - Inj646,092$.540$.600$.550$.590
 
 
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