Spot resin trading continued to improve and became busier as the week wore on. Most spot Polyethylene prices slipped another cent, continuing to track its long-term downtrend; Polypropylene prices edged a half-cent higher as PGP monomer rose further and contracts appear poised to reverse the June decrease. Buying activity really heated up on Friday as slow moving Tropical Storm Barry gained strength over the warm gulf waters, threatening key oil / gas and petrochemical infrastructure, which triggered some precautionary facility closures. The storm is expected to make landfall over the weekend as a hurricane, but is forecasted to avoid the major plastics producing regions in Texas, though there might be some impact on plants in Louisiana. As a result and in further anticipation, energy and feedstock prices rallied and some processors procured additional resin as back-up supply. The added demand boost reversed the trend of below average trading results and lifted completed volumes to excellent levels. 

The energy and NGL markets all moved higher influenced by storm related shut-downs and potential production disruptions. WTI Crude Oil futures rose above the $60/bbl resistance level midweek and held; the new front month August futures contract added a net $2.70/bbl, nearly 5%, to end the week at $60.21/bbl. Brent Crude also realized a good gain, the Sept contract rose $2.49/bbl to $66.72/bbl. August Nat Gas edged higher, rising $.035/mmBtu to $2.453/mmBtu. Ethane recouped a majority of the previous week’s losses, as prompt prices were up $.027/gal to $.16/gal ($.068/lb). The forward curve is in steep contango, with prices currently set to rise to $.225/gal by year-end. Propane rallied, reversing the prior week’s loss, prompt prices recovered $.025/gal to $.495/gal ($.14/lb), the forward curve is also in steep contango. 
Monomer trading was quite quiet, market interest was very limited, and only a handful of visible transactions were seen. Ethylene had more aggressive bids than offers, pushing prices higher throughout the week. By Friday afternoon, spot Ethylene had put up an impressive weekly gain of nearly a penny and a half, more than 10%, to settle at $.1525/lb. PGP changed hands a few times early in the week, but then slowed and there was nary a peep until Friday when the market jumped 2-cents to $.39/lb as the storm approached. Current spot levels now support a $.04-.05/lb increase, June contracts were down $.035/lb to $.365/lb, so it seems July contracts will at least recover this loss, but the market is volatile and likely to still move around. 

The spot Polyethylene trading slumber is over; the markets became busy and completed volumes tallied above average. In general, processors were in the market to restock while some also ordered extra ahead of the potentially disruptive storm moving through the Gulf. Despite the healthy trading volumes, most of our spot commodity grade PE prices still fell another penny, though LDPE Film and LD/LLDPE for Injection managed steady. Asian PE prices have been recovering the last couple of weeks and have been providing better incremental export demand at and just below prevailing Houston offers. June PE contracts seem to have mostly rolled steady, though some processors might have taken a decrease or received a volume rebate. To help add to pricing confusion, there is a $.03/lb increase on the table for July PE contracts; however, spot prices have continued to slide and the market is perhaps setting up for a July decrease to balance those that did not receive relief in June. 

Polypropylene trading picked up during the second week of July; our completed volumes were above average and prices gained a half-cent. Both processors and other resellers were active buyers in our spot market, some came to restock as a normal course of business, but order sizes were generally large, perhaps influenced by the recent strength in PGP or worries about possible supply disruptions due to tropical storm Barry. Overall supplies remain average to ample and there are still some excellent deals to be had, particularly for offgrade. July PP contracts will follow monomer contracts higher, they both appear ready to at least reverse the $.035/lb decrease that came through in June. We remain neutral to slightly bullish. 

Source: plasticstoday