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  Past Reports
Weekly Market Update
Market Update
September 25, 2015


Commodity resin trading remained relatively swift, and while there was some movement amongst grades, average pricing for both Polyethylene and Polypropylene was steady. A healthy flow of fresh offers, both domestic railcars and packaged truckloads, continued to hit the spot market. Processors, many of whom have been running their inventories down, were more willing to place orders. PE contracts dropped $.04/lb in September, bringing the 2-month relief to $.09/lb. While PP processors will not reap the entire cost PGP reduction, Sept contracts will likely see a small decrease with variance amongst participants. Houston warehouses are generally jammed full of material with plenty of cars lined up for packaging, creating logistics delays.

The major energy markets were mixed; Oil was higher and Gas was lower. WTI Crude moved around within a $3.5/bbl range before the Nov futures contract closed Friday at $45.70/bbl, down $.68/bbl. Nov Brent Oil futures again transacted just above $50/bbl midweek before sliding back to end at $48.60/bbl, a gain of $1.13/bbl. Natural Gas fell 4 of 5 days, the Nov Futures contract shed $.045/mmBtu and went into the weekend at $2.631/mmBtu. Spot Ethane rose a half-cent to $.195/gal ($.082/lb); Propane jumped $.025/gal to $.48/gal ($.136/lb).

Spot Ethylene trading was very active and prices fell sharply. Several crackers are currently offline for both planned and unexpected outages, still the supply constraints could not support the spot market. Ethylene broke down below $.20/lb for the first time since July of 2009. Material for September delivery most recently transacted at $.195/lb, a large weekly loss of $.0325/lb. While all future months also fell, the back months did not drop as much, so the contango shape of Ethylene’s forward curve steepened again. Ethylene prices are indicated to increase, peaking in March 2016 at $.25625/lb, this represents more than a $.06/lb premium to current levels.

Spot Polyethylene trading continued to improve; supply for the commodity grade resins was liquid and transactions were a bit easier to complete. The flow of widespec and downgraded prime railcars was strong and month-end discounts were generous. At the same time, buying activity has also strengthened as processors did some re-stocking at these lower levels. Still, margins compressed as suppliers competed for orders. September contracts are declining $.04/lb, and while there are price increases as much as $.05/lb on the table for October, processors are also positioning as they seek another decrease. The surge of export supply has backed up a number of Houston warehouses causing packaging and shipping delays. While international resin prices seem to have stabilized at lower levels, high volatility in the currency markets have added another dynamic, especially to the weak Latin American region.

The spot Propylene market saw only moderate activity and transacted in a tight range. PGP for September delivery traded several times both slightly higher and lower for the week; material most recently changed hands at $.27/lb, up a quarter-cent. Sept PGP contracts had already settled down $.03/lb to $.30/lb, it was the 7th consecutive monthly decrease and the 10th in 11 months. Given current spot levels, we expect very little movement in Oct PGP contracts. PGP’s forward curve flattened further, but remains in contango. Small monthly premiums build until the market peaks in July 2016 at $.29375/lb. RGP firmed about a half-cent to $.175/lb.

The Polypropylene market is just sputtering along; supplies are still sporadic as is spot demand. We are seeing some consolidation as spot offers, particularly for widespec, have become discounted, shrinking the premium to cheaper priced contracts. However, spot prime material, when available, is still trading at an elevated level. As we have seen in the past several months, average Sept PP contracts will see a small decrease of $.01-.02/lb, while producers hang on to part of their $.03/lb monomer cost savings. We anticipate little change in Oct monomer costs, so as producers push for additional margin expansion (averaging $.05/lb), it is possible to see a net increase in PP contracts next month. PP exports are not competitive in the international arena, in fact, there is a good amount of imported Polypropylene currently on the coasts with more on the way.

Total Offers 19,081,856 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
HDPE - Inj6,274,144$.530$.610$.510$.550
LDPE - Film3,831,980$.560$.655$.540$.580
HDPE - Blow Mold2,425,060$.520$.575$.510$.550
LLDPE - Film1,853,128$.540$.630$.520$.560
PP Homo1,236,392$.570$.685$.580$.620
LLDPE - Inj1,085,472$.570$.640$.570$.610
HMWPE - Film1,058,208$.555$.590$.530$.570
LDPE - Inj688,644$.550$.635$.590$.630
PP Copo628,828$.630$.740$.600$.640
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