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  Past Reports
Weekly Market Update
Market Update
January 11, 2019


The spot resin markets awoke mid-week and quickly made up for lost time; completed volumes were more than double their averages, so yes, the 2019 trading year is officially underway. After a few weeks of minimal buying, spot resin demand returned with a vengeance – processors had drawn down inventories into year-end and needed to buy, while resellers were waiting for railcars to pack out and required material for immediate shipment to their customers. Packaging delays are being seen in the Houston area as warehouses fall behind and cars start to pile up, so plan accordingly. There was a very wide range of prices quoted in the market as participants shuffled in after the holidays. By the end of the week there was some price consolidation seen, mostly a penny lower, amid an air of mixed market sentiment.

The major energy markets recorded a nice week in the green as Crude Oil and Nat Gas both finished in positive territory. Feb WTI Crude Oil futures resumed its rally on Monday and it continued all week, trading as high as $53.31/bbl on Friday. Notwithstanding a late sell-off that erased $1.72/bbl of gains, Crude still closed the week at $51.59/bbl, up a net $3.63/bbl, having recovered substantially from its cycle low ($42.36/bbl) made in late Dec. Brent Oil performed similarly, adding $3.42/bbl to $60.48/bbl. After falling sharply from its spike high of $4.70/mmBtu in late Nov, Nat Gas has been range-bound near the $3/mmBtu level since the start of the year. However, the Feb contract might have seen a break out from that range on Friday, reaching a high of $3.157/mmBtu before finishing the week at $3.099/mmBtu, up $.055/mmBtu. Ethane shed about a penny to $.30/gal ($.127/lb). Propane had a strong week, gaining more than 3-cents to $.675/gal ($.191/lb).

Monomer trading was enthusiastic and prices were mildly mixed, as Ethylene and Propylene moved slightly in opposite directions. Spot Ethylene began with solid interest as multiple transactions came together a tad lower. Interest then waned until Friday when another surge of trading ensued, bringing prices back up above $.18/lb, scoring a fractional gain for the week. Propylene levels continued to slide and peeled back to $.3675/lb. Later in the week buyers stepped in, firming prompt PGP levels, but not past $.37/lb. There was better action in the forward months and traders reshaped the curve to reflect prices rising as high as $.41/lb by the end of 2019 and $.45/lb by mid-2020, this of course will change plenty before then. In the meantime, current levels would justify an additional contract PGP decrease of $.02-03/lb for January.

The spot Polyethylene market came alive in the first full trading week of 2019. Completed volumes were quite strong as buyers returned from their extended breaks to find their silos a bit bare, requiring resin. Some orders were for urgent and immediate truckload delivery, while some were larger than typical - multiple railcars, recognizing the smart value in current pricing. In a tale of two sentiments, other manufacturers reported that processing throughput was still slower than usual and continued to delay their restocking. January is often a bullish month, but prices were mixed last week ranging from flat for LD Film and LLDPE Injection to down $.02/lb for HMW.

In December, upstream PE inventories continued to swell, adding another 317 million pounds, to enter 2019 with a massive collective stock of 5.36 billion pounds. Some justify these rising inventories as necessary to support higher ongoing sales. Resin reactors continued to run at a high rate, operating full throttle. This build is despite total sales increasing nearly 140 million pounds over November. The elevated sales figure was mainly due to producers exporting nearly 1.46 billion pounds of PE, which comprises a record 36.5% of total sales.

Polyethylene producers acquiesced to customer and consultancy calls for a December price decrease, doubling up the 4th quarter relief to now $.06/lb. But before you go out and splurge spend this holiday bonus, note that Scrooge also laid ground to swipe it right back… producers also nominated a $.06/lb price increase effective January contracts. Hey, not so fast, give processors some time to celebrate.

Market participants returned from an extended holiday break ready to deal, and the Polypropylene market (and our trading desk) welcomed the action. HoPP and CoPP prices were pressured heavily just as the year began, and managed steady this past week as some spot resins were scarce and PGP held its ground. In a relatively rare occurrence, our railcar transactions outstripped truckload deals, reflecting not only the lack of available packaged material, but also buyers recognizing value in these heavily discounted prices.

While Polypropylene contracts already lopped off a stunning $.18/lb over the past two months, the Dec decrease of $.08/lb was deemed a tad light. Given spot PGP monomer levels since then, it seems that another $.02-.03/lb should be relieved in January. We would prefer to have seen the entire dime come out of the market in Dec, for true bottoming action, but still, after such a swift and sharp correction, there seems relatively little downside risk at this juncture. Our trading side of the business maintained minimal PP inventory during the 4th quarter, so we began to pick away with strategic buys this past week, building up our unsold stocks.

Total Offers 14,828,720 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
PP Copo2,718,024$.540$.700$.560$.600
PP Homo2,462,736$.520$.640$.540$.580
HDPE - Inj1,787,748$.480$.560$.460$.500
LLDPE - Film1,631,404$.470$.580$.440$.480
HDPE - Blow Mold1,449,196$.480$.560$.450$.490
LDPE - Film1,350,024$.480$.570$.450$.490
HMWPE - Film1,205,472$.490$.570$.460$.500
LLDPE - Inj1,157,196$.520$.620$.500$.540
LDPE - Inj1,066,920$.500$.600$.490$.530
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