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  Past Reports
Weekly Market Update
Market Update
March 15, 2019


Spot resin trading was somewhat sporadic with intermittent periods of quiet mixed in with spurts of aggressive activity. The flow of fresh railcars was a little lighter, though some resellers also sought to unload their uncommitted warehoused stocks, which aided market liquidity. Polyethylene prices remained steady for the second week in a row; spot levels have lifted between $.005-.02/lb above this cycle low, which occurred about a month ago. Polypropylene offers continued to pelt the market, and some suppliers seeking sales reduced railcar asking prices, seemingly just trimming margins to spur demand. It was enough pressure to shave another half-cent from both HoPP and CoPP levels. Despite a price increase on the table, PE contracts should roll flat at best; PP contracts will decrease in-line with the decline in PGP monomer, currently estimated at $.03/lb.

The major energy markets were mixed and generally strengthened as the week wore on. WTI Crude Oil futures rolled to May and made new cycle highs, reaching $59.25/bbl, a level not seen since the beginning of October. Some profit taking was seen on Friday but WTI still ended the week at $58.82/bbl, up a net $2.39/bbl. Brent Oil was not quite as strong; the May contract only added $1.42/bbl to $67.16/bbl, shrinking its premium to just $8.34/bbl. Nat Gas pulled back a bit, though remained range bound as it has been for the past several weeks. The April contract shed $.07/mmBtu to $2.795/mmBtu. Ethane took a tumble, the April contract came to the forefront and lost a large $.02/gal to $.276/gal ($.116/lb). Propane saw some back and forth trade and ended the week at $.685/gal ($.194/lb), essentially unchanged.

Spot monomer trading was sluggish this past week, visible transactions were sparse and prices saw little change. Prompt Ethylene only garnered bids below last value and finally changed hands fractionally lower at $.15/lb late in the week. There was better buying in the deferred months and the forward curve’s contango shape steepened ever so slightly. Propylene found some scattered interest throughout the week, but buyers and sellers still seemed separated by price. PGP for prompt delivery shored up a very modest gain and settled right around $.325/lb. Prompt PGP levels are currently the cheapest on the board, all future months are priced at a premium; Dec 2019 is just above $.36/lb and Jun 2020 is now shown a shade below $.40/lb. In the meantime, March contracts will soon settle and we are eying a decrease around $.03/lb to $.355/lb or so.

Spot Polyethylene trading picked up steam as the week moved along finishing with a flourish of activity on Friday. Spot market activity came in waves, much as we have seen so far during 2019, and despite these ebbs and flows, completed volumes were surprisingly high last week. Our official PE prices did not see change during the week, although sellers’ asking prices generally began higher before being whittled back down to familiar levels to enable transactions. Processors continue to tap the spot market for relative deals, some minimizing their contract purchases, which to some, remain frustratingly high. At this juncture we do not feel that the current $.03/lb price increase warrants implementation.

Overall domestic Polyethylene demand was soft in Feb, down about 5% from the trailing 12 month average, though export sales continued to pick up the slack, running a solid 1.25 billion lbs, representing 32.5% of total sales. These preliminary results, which tend to revise, also indicated that production issues and maintenance impacted PE production, which pulled back to the lowest level in a year. This led to a sizable draw from producers’ collective inventories, the first since October. While supply / demand fundamentals are improving, we have yet to see much impact on spot prices, which remain well discounted to general contract levels.

Polypropylene trading eased back from its recent heightened pace, reverting back to a more normal, if not lackluster level. While offers were consistent, demand was lax, and enthusiastic sellers shaved prices to gain orders, resulting in a half-cent decline in both HoPP and CoPP. Preliminary results indicated that PP demand was soft in Feb, the weakest since last Feb, which is historically a seasonally slow month for PP, before stronger demand kicks back in.

Reduced production contributed to a moderate draw in upstream PP inventories, the first since October. We expect March PP contracts to decrease about $.03/lb along with the anticipated drop in monomer contracts. Unless the entire PGP forward curve readjusts lower, PGP prices are now forecasted to begin a long and slow uptrend, which will at least be matched by PP. We are often early calling for market trend changes, but as long as the price is right, now feel comfortable buying a bit more than we are selling.

Total Offers 15,896,972 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
PP Copo3,482,920$.460$.660$.505$.545
PP Homo3,205,840$.510$.630$.485$.525
LLDPE - Film2,288,024$.450$.560$.445$.485
HDPE - Blow Mold2,022,736$.465$.540$.455$.495
LDPE - Film1,987,312$.470$.550$.455$.495
HMWPE - Film837,748$.460$.540$.455$.495
LLDPE - Inj759,012$.500$.600$.475$.515
HDPE - Inj737,012$.450$.545$.455$.495
LDPE - Inj576,368$.490$.540$.475$.515
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