Spot resin trading stayed strong, and the veracity of activity actually accelerated, achieving our highest volume week so far this year, about three times the average. Our order flow was well diversified and nicely spread between Polyethylene and Polypropylene, truckloads and railcars, prime and offgrade for both domestic and export shipments. The stellar trading results were initially demand driven, and then amply accommodated by aggressive suppliers, willing to meet some super sharp bids in order to complete transactions and move large amounts of resin. The export markets have remained active, but parts of Europe have slowed for holiday and traders are generally cautious given trade wars and new resin production coming online in both the US and abroad. 

The major energy markets were mostly lower in very volatile trading. WTI Crude Oil came under early pressure and was within striking distance of the psychological $50/bbl level before snapping back about $4/bbl to end the week at $54.50/bbl, down just $1.16/bbl. Brent Crude continued to heavily outperform WTI to the downside; the Oct futures contract dropped a hefty $3.36/bbl, more than 5%, to $58.53/bbl, bringing its premium over WTI to only $4/bbl. Nat Gas continued to trade near multi-year lows, though this week saw only a small fractional loss to $2.119/mmBtu. Propane maintained its negative bias, losing $.033/gal to $.415/gal ($.119/lb). Ethane bucked the overall downward trend and regained about half of the previous week’s massive loss, it bounced back $.0258/gal to $.151/gal ($.0637/lb). 

The spot monomer markets were very busy, there was good price movement and large volumes of material changed hands. Ethylene trading was busy all week, bids / offers were plentiful and deal after deal came together. There was strong spot demand for Ethylene in Choctaw, LA and prices there soared as high as $.235/lb before settling back to $.22/lb, which is still quite a premium to material in TX which commanded just $.17/lb at week’s end. TX material saw a weekly loss of $.015/lb and had reached as high as $.195/lb post the Baytown Fire. Forward pricing has been hit relatively hard and now suggests a discount to prompt levels. Propylene for prompt delivery found support and rallied a bit. Spot PGP began the week trading flat at $.345/lb and was then bid higher before transacting at $.36/lb, a $.015/lb gain. PGP also saw relative weakness in the forward months causing the curve to flatten somewhat and minimize the premium afforded for material as time marches. Given spot Propylene pricing and activity, we currently foresee little change in August PGP contracts. 

The spot Polyethylene market roared with life, activity was heightened throughout the entire week, despite very little price change amongst the commodity grades. Completed volumes were well above average as both railcars and truckloads changed hands at a rapid rate. Our Generic Prime prices, which have been sliding, were mostly flat except for LLDPE Injection which lost a penny as availability improved. Many cars are delayed and/or caught up in the Houston shipping grid, while some terminals are bulging with material causing packaging dates to be pushed out. So in general, Polyethylene material that is currently packaged and ready for immediate shipment has been commanding a nice premium versus fresh railcars that have yet to ship. 

Polyethylene producers went on a bit of a campaign to reaffirm their intention to raise prices in 3Q, currently $.03/lb is on the table for August and an additional $.04/lb has been proposed for September. Although these increases currently seem out of place given the $.03/lb contract decrease in July, a production issue or a major storm can disrupt the supply chain and cause a sudden jump in prices which is at least partly why the recent nominations exist. And do take notice that the 2019 Hurricane season has been re-forecasted to now be on the heavier side of average. 

Polypropylene trading continued its hectic pace during the first full week of August. As contract resin prices closely shadow monomer costs, market sentiment improved a touch with the higher spot Propylene quotes this week. Still, overall HoPP and CoPP pricing was flat and our demand favored Copolymer materials. In general, PP availability was good, but not overly abundant; suppliers were aggressive enough with their offgrade railcar pricing and we were able to fill nearly every viable order that was presented. Packaged truckload offers were a bit scarcer and commanded a premium for immediate delivery. Given spot PGP costs, we anticipate little change in Aug PP contracts. With the peak hurricane season approaching, we recommend keeping ample supplies on hand and on order. 

Source: plasticstoday