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  Past Reports
Weekly Market Update
Market Update
March 13, 2015


Spot resin trading activity moderated as mid-month approached. Although the flow of resin offers during the first half of March has been lighter than Jan/Feb, spot PE and PP mostly shed a cent this week with the top of the supply chain in mind. Crude Oil just took another leg down, testing the 6 year lows inked in late Jan. While the affect of this recent break has not yet really begun to work downstream price-wise, it started to sap the resin markets’ modest upward momentum that developed over the past few weeks. There had been a small restocking effort taking form by processors, but sentiment is turning more negative again, pushing buyers away from the market.

The major energy markets were all lower, as the continued growth of Crude Oil inventories and storage capacity concerns provided increased pricing pressure. April WTI Crude Oil futures saw a small rise on Monday but fell the rest of the week approaching contract lows, finally ending at $44.84/bbl, a large loss of $4.77/bbl, nearly 10%. April Brent Crude Oil saw a similar decline, dropping $5.05/bbl to close Friday at $59.73/bbl. April Natural Gas slid further, eliminating $.112/mmBtu to $2.727/mmBtu. Spot Ethane was fractionally lower to $.185/gal ($.078/lb). Spot Propane dropped about a nickel to $.53/gal ($.15/lb).

The spot Ethylene market saw increased activity; a high volume of material transacted, but ultimately resulted in little net price change. One cracker returned onstream after completing its maintenance; a couple other crackers went offline for their scheduled turnarounds. Ethylene for March delivery began the week at $.34/lb and had a quick mid-week rally to $.36/lb before easing back to $.34/lb into the weekend. Ethylene’s forward curve is slightly backwardated with prices seen easing about a penny by Dec 2015.

Spot Polyethylene trading slowed to a more average pace; prices were mostly $.01/lb lower with some variance seen by grade. Overall availability remains good, and while there are pockets where packaged supply is lacking, all commodity resins can be had by rail. Processors are seeking another contract price decrease in March to add to the $.16/lb relief seen over the past 4 months; producers would like to see contracts roll flat.

According to preliminary reports, domestic Polyethylene sales in February were nearly 2.6 billion lbs, about the same as in January, both about 1% below the trailing 12 month average. PE exports were 560 million lbs; also right on the 12 month average, but about 10% below the past 5 year average. PE producers throttled reactor rates back to only 92%, but still added another 20 million pounds to their collective inventories, the seventh consecutive increase. March started with more than 3.82 billion lbs of Polyethylene on hand, a figure eclipsed just once, and barely, since we began keeping records 9 years ago.

The Propylene market saw minimal activity with just a couple of spot deals done. PGP for March delivery most recently changed hands just above $.45/lb, about flat for the week. Although a small increase was initially nominated for March PGP contracts, weak spot conditions, brought about in part by both softer upstream markets and slower downstream demand from PP producers, complicated that effort. Instead, PGP contracts settled this week at $.49/lb, down $.015/lb, a new cycle low. The PGP curve is backwardated to the tune of $.015/lb by Dec 2015. RGP was indicated in the vicinity of $.40/lb.

The spot Polypropylene market was thinly traded, but prices eased $.01/lb as March contracts will average a little lower – balancing a PGP monomer decrease with a margin expanding PP increase. Spot Propylene availability can still be challenging: well-priced surplus railcars are hard to come by, Houston traders own little material as US prices have been uncompetitive on the international markets, and those national resellers with uncommitted material are often pricing their material too high for processors to swallow. PP contracts were down $.23-.24/lb over the past 4 months, they will be steady to $.015/lb lower in March.

Preliminary results show that domestic Polypropylene demand in February was a clean 1.3 billion lbs, 60 million lbs less than January and 36 million lbs off the last 12 month pace. PP exports were an insignificant 25 million lbs, about the lowest we have seen in the last 9 years. Production issues and Force Majeure conditions kept Polypropylene operating rates to just 82%, helping producers reduce their collective inventories by 53 million lbs; the draw over the last 3 months has totaled 100 million lbs. March began with 1.466 billion lbs on hand, about 35 million lbs below the 12 month average.

Total Offers 15,500,220 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
HDPE - Blow Mold2,865,980$.555$.630$.540$.580
LDPE - Film2,550,944$.580$.670$.580$.620
HDPE - Inj2,421,864$.560$.615$.570$.610
LLDPE - Film2,364,140$.590$.650$.560$.600
LLDPE - Inj1,526,392$.560$.640$.610$.650
PP Homo1,366,852$.670$.760$.660$.700
HMWPE - Film1,014,116$.565$.610$.580$.620
LDPE - Inj705,472$.575$.635$.630$.670
PP Copo684,460$.700$.780$.680$.720
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