Commodity resin trading improved again this week compared to the dismal start to the month, but overall volumes still tallied the lowest of 2019, though still above Nov and Dec levels. Most Polyethylene prices slid another penny while Polypropylene shaved a half-cent. Spot processor demand was still slow and some resellers were seen liquidating some positions as the first half of the year came to an end. Buyers had backed away early in the month as energy and feedstock costs came under significant pressure. PE contracts certainly did not implement the $.03/lb increase that was on the table and there is a chance that a late decrease might actually come through. PP resin contracts followed PGP monomer costs down $.035/lb, but the rebounding monomer market is already pointing to a small gain for July, though it is still very early and plenty can change. Incremental export sales were still off their rapid pace, but direct producer sales seemed to remain robust. All in all it was an excellent first half of 2019, we appreciate all of the business - and for those that do not yet access our liquid spot resin market, well, come give us a shot!!
The major energy markets rallied as June came to a close. WTI Crude Oil built on its recent recovery gains, adding another $1.04/bbl to settle at $58.47/bbl. Once again, Brent Oil did not exhibit the same strength as Oil on this side of the big pond and managed to rise just $.29/bbl, ending the week at $64.74/bbl. Nat Gas futures bounced a good 6%, but even with the $.139/mmBtu gain to $2.308/mmBtu, the August contract remains within shouting distance to recent contract lows. NGLs saw little price movement; Ethane was nearly unchanged at $.17/gal ($.072/lb), while Propane fared about the same, holding steady around $.495/gal ($.14/lb).
The monomer markets were quiet - volume was low and prices edged just slightly higher. Ethylene saw a few scattered bids and offers as the market was quiet until Thursday, when several spot deals emerged and June Ethylene changed hands a few times above $.13/lb. July then took over and settled at $.135/lb, for a small fractional gain. Propylene was a bit busier and scored a gain each day until Friday when it eased back a tad. July PGP ended the week at $.345/lb, up about $.0175/lb from where June retired. The entire forward curve rose and the June 2020 peak finally rested back above $.375/lb. June PGP decreased just $.035/lb to $.365/lb, which was deemed light. This past week’s PGP gain more than made up for the discount and is already starting to lean towards a small July increase.
The spot Polyethylene market ended June and the first half of the year somewhat sluggish, quite in contrast to the first 5 months, when volumes were well above year over year comps. Although this past week’s results were better than they had been during the first part of the month, a full flung flurry failed to develop. As a whole, June was the lightest trading month of the year as negative sentiment slowed processor purchases, which weighed on prices. Our spot Polyethylene levels were down a penny across the board this week as buyers, some reporting slower throughput, again chose to work down inventories in hopes of lower prices ahead. While producers sought a $.03/lb increase for June, which did not implement and was rolled to July, final June contracts still remain a bit cloudy as a major consultancy estimated the market down $.03/lb; however, it has not been confirmed that producers will acquiesce as they seem to be holding pricing flat. PE inventories in other regions appear to be swelling and despite WTI Oil trading back near $60/bbl, weak international resin prices continue to pressure export levels.
Spot Polypropylene trading managed to achieve average results this past week. There was a good, sometimes heavy flow of railcar offers as some resellers looked to move material at a discount rather than add unsold resin to their inventories. Buyers did pick away with orders as there were some very sharp deals to be had, but there remained ample supplies as the week came to a close. We continued to see decent demand from Mexico, but otherwise incremental exports were challenged by price and interest. Another half-cent ticked off HoPP and CoPP levels which caught up (or down) to the June contract decrease. The Polypropylene market can be known for turning in a heartbeat, so with upstream resin inventories at historic lows and PGP bouncing a bit from the June slide, we advise maintaining comfortable resin stocks on hand.