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  Past Reports
Weekly Market Update
Market Update
February 19, 2024


Commodity resin trading kept its healthy pace and participants continued to tap our spot market amid tighter availability, elevated monomer costs, and strong export demand. Spot prime Polyethylene and Polypropylene railcar offers were relatively scarce and offgrade railcar specs were usually less-desirable. Reseller stocks were generally thin and somewhat picked over, but with thorough searching most commodity grades could be sourced at current competitive, albeit rising prices. Our completed volumes were again robust and well above our typical average and much of our order flow was filled from our market-making inventories. Buyers have become more accustomed to current elevated levels and we are seeing less push-back on pricing ideas. The run on resin sparked another weekly increase in pricing with prime PE and PP grades adding at least another penny. With the sustained rally adding support, producers are still seeking their 5-cent increase for Feb PE contracts, while heightened PGP monomer costs have Feb PP contracts poised for another increase too. Exports markets remained hot though some of the initial panic buying driven by the Red Sea logistics disruptions has subsided. Overall international market sentiment remains bullish and it will be interesting to see if strong Asian buying returns as the Lunar New Year completes.

Polyethylene trading accelerated as we pulled into mid-month, our order flow was strong and well-spread amongst the typical commodity grade resins along with Roto resin and EVA too. Export sales had been trending higher already and have been further helped by ongoing logistical issues the past few months as regional supply / demand has been displaced. This has given producers additional demand and at rising prices, providing them with happy outlets for incremental pounds while keeping the resin off of the domestic market. This alternative demand has soaked up surplus resin and has tightened domestic supplies, which has been placing upward pressure on domestic prices. Most of our prime PE grades added a penny this past week while HDPE film, which has been in particular short supply jumped 2-cents. This overall rally in PE is in line with expectations that we have discussed in the past few weeks / month as international resin prices have firmed alongside rising freight costs. The increase in PE spot levels so far this month has encouraged producers to stand firmly in favor of enforcing another nickel increase in Feb after successfully implementing their $.05/lb hike in Jan. Preliminary supply / demand data for Jan was released by the American Chemistry Council and it revealed Polyethylene production and domestic sales both 2% higher than the trailing 12 month average. Exports continued to astound as they ran 6.5% above the 12-month average, but more notably, 480 million pounds above Jan 2023. Altogether this brought a mild draw from upstream PE stocks, though HDPE inventories have now drawn for six straight months and have peeled back to the tightest levels since March 2023. For a more detailed look, we encourage you to subscribe directly to the ACC.

Polypropylene had another very active week and a relatively high volume of resin transacted across our marketplace. About half of the transacted volumes were filled from our market-making inventory, and we only selectively restocked certain grades when workable opportunities presented themselves, which was infrequent. Availability has gotten a bit more snug, especially with the Ineos FM still in place out of Texas, and another major producer at reduced run rates. Prices for prime HoPP and CoPP rose another penny even as the rally in PGP paused and costs pulled back a bit. Much of the older reseller inventories that hung over the market have been cleaning up and we saw other resellers, many of whom are caught short of material, compete for railcars which drove offgrade prices higher. Processors aggressively bought spot CoPP material that was priced below their contract levels which will see an imminent cost-push increase in Feb, now gravitating towards $.04/lb. HoPP was a big mover too, especially in to Mexico, though most sales were restricted to prime. January data released by the ACC showed dramatically reduced operating rates, nearing 70%, which yielded the lowest Polypropylene production since Dec 2022. Domestic sales were 2% higher than the 12 month average, while exports were strong at almost 10% above average. When the dust settled, there was a hefty upstream inventory draw of 138 million pounds during Jan, and the lack of resin has been noticeable this month.

Participation in the monomer markets was heavy, though completed volumes were light as prices slid. Ethylene entered the week with slight strength on Monday, but the bullishness could not be fed and positive sentiments quickly fizzled. The first transactions were seen on Tuesday when spot Feb Ethylene exchanged hands twice at $.195/lb in Texas, down fractionally from Friday. Traders next moved delivery locations to Louisiana where they executed both Feb and March Ethylene at $.1975/lb, a deal involving May-June Ethylene for both TX and LA was also recorded. On Wednesday, the market tore off a near half-cent and a few deals were finalized, 2Q ‘24 Ethylene was brokered at $.19/lb in TX followed by two agreements for March deliveries in LA at $.19375/lb. Prices continued to leak through Friday and prompt TX Ethylene transacted three more times at $.18875/lb before the market came to rest. By the end of the week spot Feb Ethylene had sliced off nearly a cent to $.1875/lb. The forward curve moved alongside and remained in an inverted bell shape.

Propylene saw ample market involvement but deals were few and far between with most of the completed volume tallied mid-late week. Spot PGP limped into the week flat though the forward curve endured immediate losses, and prices from July onward came off $.0075/lb or more on Monday. The first deals were recorded late on Tuesday when Feb PGP swapped hands a couple times at $.54/lb, and while prompt pricing remained flat from Friday, far back options took another sizable hit ripping off at least $.02/lb. Midweek, spot prices began to retreat and traders solidified three separate deals for April PGP at $.485/lb, and moving in opposition, the forward curve recouped much of its early week losses. Prices dipped lower again on Thursday and a deal for 2Q-3Q deliveries was inked late in the day at $.4475/lb. A few bids and offers were posted to the boards on Friday but price ideas were too far apart to conclude further business. By end of day, Feb PGP was only bid at $.50/lb and the weighted average of spot Feb PGP clipped off a penny to rest at $.5175/lb. Deferred months saw deeper losses and the backwardated forward curve through yearend widened. Peak pricing remains in prompt Feb with the cheapest availability seen in Nov & Dec ’24 where material was priced below $.43/lb while prices starting in ’25 rebound. Coupling together the early month’s trade with current spot levels, we still expect upcoming Feb PGP contracts to settle around $.04/lb higher from the previous Jan contract settlement of $.51/lb.

The energy complex stayed on its divergent path with Crude Oil gaining more ground while Nat Gas extended its losses. The rise in Crude Oil was still being driven by ongoing tensions in the Middle East, which overshadowed inflationary and demand concerns. There was some winter weather in parts of the US this week, but it was not widespread enough to lift Nat Gas pricing. March WTI rallied from a Monday low of $75.54/bbl to hit a Friday high of $79.35/bbl and when the final bell rang, March WTI had garnered a weekly net gain of $2.35/bbl to $79.19/bbl, its highest level since November. April Brent established its entire $2.94/bbl range late in the week, going from a Thursday low of $80.72/bbl to a Friday high of $83.66/bbl, and headed into the weekend $83.47/bbl, a net gain of $1.28/bbl. March Nat Gas futures started with a Monday high of $1.863/mmBtu before eroding 29 cents to a Thursday low of just $1.573/mmBtu before recovering a tad to end Friday at $1.609/mmBtu, for a total decline of nearly 24 cents (-13%). NGLs were also mixed with Ethane down nearly a penny to $.184/gal ($.078/lb) and Propane up fractionally to $.920/gal ($.260/lb).

Total Offers 14,374,048 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
PP Homo2,656,024$.525$.700$.620$.670
HDPE - Blow Mold2,145,918$.510$.700$.620$.670
HDPE - Inj1,893,864$.505$.575$.520$.570
PP Copo1,892,852$.560$.750$.680$.730
LLDPE - Film1,658,256$.505$.600$.520$.570
LDPE - Film1,487,596$.530$.610$.530$.580
LLDPE - Inj1,215,828$.580$.650$.560$.610
HMWPE - Film747,858$.530$.585$.530$.580
LDPE - Inj675,852$.550$.620$.580$.630
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