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Weekly resin report: Holiday shoppers take advantage of discounts
Spot resin trading improved; demand showed signs of life while material offers showed signs of slowing. Commodity Polyethylene and Polypropylene prices were flat to a penny lower as the market remained in the throes of special holiday discounts. PE buyers are hoping for further relief in December, some are seeking a repeat of the $.03/lb Nov decrease. PP buyers will reap the benefit of eroding monomer costs as contract resin prices are poised to settle about $.08/lb lower, it’s been a sharp and swift 2-month correction. Polyethylene exports continue to grow as part of producers’ plans to sell off supplies from new production which is already on-stream, with plenty more still coming online. There are some great spot resin offers still available, but we expect availability to begin to dry up as the year-end approaches. Get them while you can!
The major energy markets all ended in the red. WTI Crude Oil has found good support around $50/bbl, a key psychological level, but hasn’t been able to make a meaningful recovery; the Jan contract peaked this week at $53.27/bbl before giving back the week’s gains and then some, ending at $51.20/bbl down a net $1.41/bbl. Brent Oil saw similar results; the Feb futures contract shed $1.39/bbl to $60.28/bbl. Nat Gas prices got rocked, falling precipitously after reaching a Monday high of $4.666/mmBtu. The Jan contract traded in a huge 20% range and ultimately lost a large $.661/mmBtu to end the week at $3.827/mmBtu. Ethane began on its high and sold off from there, finishing at $.284/gal ($.12/lb), shedding $.035/gal along the way. Propane pricing was also pressured, dropping $.03/gal to $.70/gal ($.20/lb).
Monomer trading was mixed this past week, there were several surges of activity appearing among a few quieter sessions. Volumes were generally healthy and prices maintained their recent trends. Spot Ethylene trading was sporadic and material for December delivery changed hands multiple times at the $.20/lb mark, very familiar territory. The market closed steady again in what continues to be a very flat market.
Propylene prices remained weak and spot continued to trade at a relatively large discount to contracts. PGP for prompt delivery shed another cent to $.375/lb. December PGP contracts began to settle early this month, down another $.08/lb to $.42/lb, bringing the 2-month loss to a staggering $.18/lb.
The spot Polyethylene market finally picked up as December reached mid-month; prices were steady to a penny lower depending on product. The flow of offers remained heavy, though seemed to slow towards the end of the week. Trading volumes increased, reaching average levels, as buyers took advantage of the very competitive supply environment amid ever decreasing material costs. Resin prices have been on a special discount and some buyers, knowing that holiday sales do not last forever, began to procure in larger sized orders preparing for January needs. So after a period of weakness, negative market sentiment is starting to wane a tad. Even so, many are still calling for further contract price declines, hoping that Dec contracts match the $.03/lb decrease that peeled off in November. At least one producer has nominated a $.03/lb and $.05/lb increase for Dec and Jan respectively in an apparent attempt to at least maintain current levels as fundamentals don’t seem to support an increase. International interest continues to pour in, as traders exploit the loose Polyethylene supply situation in North America.
Spot Polypropylene trading was about average; there was a steady supply of fresh railcars, both Prime and Offgrade, while supplies of packaged material were seen dwindling. Spot PP prices eased another cent as Dec PGP contracts began to settle $.08/lb lower, bringing some clarity to the PP contract market, which should follow. Demand was unenthusiastic, due to the combination of PGP erosion pulling down PP prices along with processor de-stocking efforts. However, buyers did probe the spot market seeking relative deals and some were clearly disappointed that suppliers still required a pretty penny to fill urgent requirements. Looking ahead, we anticipate demand returning as the sharp readjustment in contract prices will compel buyers to begin to restock as they peer into their early 2019 processing needs.