The spot resin markets continued to heat up, our completed volumes were high while prices moved lower. There was a collective sigh of relief after Tropical Storm Barry, which briefly became a hurricane, quickly came and went without any significant industry disruptions developing. In the aftermath, energy and monomer markets turned back lower, which helped to drag down Houston resin prices. Spot resin offerings were heavy and sharper discounts were seen for both Polyethylene and Polypropylene railcars, particularly offgrade; however, buyers did not run for the hills, rather they welcomed the cheaper resin and were out buying with both hands, restocking their relatively light inventories. With continued weakness in spot pricing, we would not be surprised to see a Polyethylene contract price decrease finally come through industry wide. The pending Polypropylene price increase has been fizzling out as Propylene costs ease back, but a small uptick will likely still occur.
Despite continued hostilities and aggressions on oil tankers in the Persian Gulf region, the major energy markets reversed course and proceeded to plummet. WTI Crude Oil rolled to September and dropped a hefty 7.5%, shedding $4.54/bbl to $55.75/bbl. Brent Oil saw similar downward pressure and gave back $4.25/bbl to $62.47/bbl. Nat Gas futures were down every day last week, relieved that Hurricane Barry essentially just breezed through the Gulf with limited disruption. The August futures contract eroded $.202/mmBtu, more than 8%, to settle at just $2.251/mmBtu. August Propane slid a half-cent to $.518/gal ($.147/lb), while Ethane was the only product to buck the trend as the August contract gained $.013/gal to $.195/gal ($.082/lb).
Monomer trading ramped back up this past week and healthy volumes transacted while spot prices retreated after the threat of Hurricane Barry blew by with more bluster than bite. Ethylene opened weak and prices slid through Thursday when the selling pressure finally eased. Dealings were mostly focused in the forward months and by Friday, Ethylene for prompt delivery had hacked off nearly 7%, losing more than a penny to settle around $.14/lb. Propylene also came under immediate pressure once Barry’s potential destruction dissipated into mere heavy rain and higher winds. Prompt PGP prices crumbled, peeling back the previous week’s gains. Selling tapered off midweek and prices managed to recoup a sliver of the early week losses on Thursday, but nearby PGP still lost nearly $.025/lb to end the week just below $.36/lb. With the recent retreat, current spot levels now only point to a contract increase of perhaps $.02/lb, though there is still time left for the market to readjust before contract negotiations conclude.
Spot Polyethylene trading continued to transact at a very rapid rate and completed volumes have already surpassed the total June tally. Our trading desk was kept busy at work as the buying splurge continued, all of which seemingly started when Gulf Storm Barry first became named. Despite the benign scare, heightened activity still persisted even as spot prices softened at least a cent. Most commodity PE grades set their lowest marks in more than a decade, though LDPE and LLDPE for Injection have been hanging in the best amid tighter supplies than the rest. Although a $.03/lb contract price increase is on the table for July, an official decrease is seeming more likely for those that did not already receive relief in June. Spot prices are just too weak and discounts are too large to justify an increase at this time and a $.03/lb decrease would just wipe away the surprise increase that took hold in April.
Polypropylene trading was remarkably busy for the third straight week, transacted volumes remained elevated and Generic Prime prices slid a penny, while deeper discounts were available for offgrade. The burgeoning PGP monomer rally already began to unwind and currently supports just a mild increase for July. There was a good flow of fresh prime and offgrade railcars as well as packaged inventory offered in Houston, while warehoused product throughout the rest of the US was a bit scarce. Both resellers and processors were good buyers this week, some to fill in supply gaps and others to restock / build inventories at these seemingly favorable prices; export demand from south of the border also began to perk up, a little.
We are seeing some great deals out there and buyers clearly agree, as a sustained flurry of railcars and truckloads have been changing hands through our marketplace. If you haven’t already joined our market, come contact us to tap these better buys.