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  Past Reports
Weekly Market Update
Market Update
August 21, 2015


The Spot resin markets continued to transact at a rapid rate, Polyethylene more so than Polypropylene. Completed volumes were considered high and prices, which had been consistently falling for weeks on end, mostly held steady at these lower levels. Nearly all PE producers have lowered their August contract prices by $.03/lb, although there are still widespread calls for a larger decrease. Polypropylene producers are quickly losing favor in processors’ eyes as they try to jam through a net price increase amid a 10% drop in PGP monomer costs. Houston resin prices remain weak and given concerns about oil prices and general economic health, sentiment in both the domestic and international resin markets remains bearish.

The major energy markets were all sharply lower and October rolled to the front month futures contract. WTI Crude Oil prices fell further, breaking under $40/bbl for the first time in more than 6 years. The October futures contract ended the week at $40.45/bbl, a loss of $2.66/bbl, which represented a 6% decline. Oct Brent Oil futures dropped even more, shedding $3.73/bbl, 7.5%, to close Friday at $45.46/bbl. Oct Natural Gas futures skidded 5%, and the $.14/mmBtu break brought prices back to $2.697/mmBtu, the lowest close since early June. Spot Ethane slid about a cent, ending the week just shy of $.19/gal ($.08/lb); Propane also shed about a penny to just under $.37/gal ($.105/lb).

The Spot Ethylene market was volatile and after massive erosion (a whopping $.545/lb since last October), prices recovered a bit this past week. There were a few production issues, but for the most part the vast majority of the Gulf’s crackers are running full out. Ethylene began to climb back from the $.22/lb level, which was the lowest since July, 2009. Material for August delivery slowly gained ground and picked up speed as the week wore on, rising as high as $.26/lb, before settling back to most recently transact at $.24/lb. Ethylene’s forward curve has taken on a contango shape, prices are indicated to rise about $.025/lb over the next 6 months and then tail off.

The spot Polyethylene market saw good activity, the flow of offers for both domestic railcars and Houston packages was heavy; consequently, most PE grades are readily available at discounted prices. Spot buying was better as procurement opportunities below the suggested $.03/lb August decrease were presented. Producers have long resisted the call for a larger price decrease; although it is getting late in the month, it is still possible and if not in August, it should come in September. As export offers continue to fall while suppliers chase demand from international markets, traders remain nervous and tentative to take on new positions without hard orders to fill.

Although there were just a few spot transactions, Propylene prices continued to move lower. PGP for August delivery traded down to $.28/lb, which was a loss of more than a cent. PGP for September delivery, which is right around the corner, changed hands yet a quarter-cent cheaper. Although contracts were initially nominated to roll flat, weak spot markets brought about a sizable decrease. August PGP settled at $.33/lb, down $.035/lb. Given current spot levels, unless something changes, another decrease should be forthcoming next month as well. PGP’s forward curve has flattened further, prices now reach just $.30/lb by next summer and are quoted there through the end of 2016. RGP changed hands just below $.18/lb, maintaining healthy splitter margins.

Polypropylene trading activity was good and transacted volumes improved. There was a wide range of prices offered into the market - some grades remain very tight, particularly Random Clarified, while others like Homopolymer are becoming more available. New lows were seen for offgrade material in Houston. Overall PP demand has been very good, while some enduring production issues are keeping suppliers tight - producers continue to leverage this dynamic to expand margins. Even though PGP contracts dropped $.035/lb, resin producers seem intent to implement a net price increase as much as $.015/lb. Given sharply declining costs due to the overwhelming rout in energy and feedstock markets, downstream participants view this increase with disdain and feel some benefit should be shared. With an eye on the current spot Propylene market, another cost decrease appears to lie ahead and this could sap some contract PP orders until Sept.

Total Offers 16,039,368 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
HDPE - Inj3,590,348$.520$.600$.540$.580
LDPE - Film2,783,060$.600$.680$.570$.610
LLDPE - Film2,504,760$.545$.640$.540$.580
HDPE - Blow Mold2,500,048$.520$.630$.530$.570
PP Homo1,337,932$.560$.680$.560$.600
HMWPE - Film1,248,208$.575$.630$.560$.600
PP Copo916,368$.590$.680$.580$.620
LLDPE - Inj644,552$.560$.615$.560$.600
LDPE - Inj514,092$.580$.670$.580$.620
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