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  Past Reports
Weekly Market Update
ThePlasticsExchange.com
Market Update
November 27, 2020

Summary

Spot resin trading activity was mixed, with better than expected PE demand becoming more notable than the continued lack of PP supplies. Export buyers raised their bids which helped to clean up the lower side of the Houston pricing spectrum, but not enough to move the needle on our benchmark prices, which held steady across the board. Our completed volumes in November did not impress and with just a day to go will tally amongst the lowest of 2020. The slack results were not for a lack of hustle, but rather a challenging sourcing environment and a plethora of mismatched opportunities. Overall Prime resin availability remained low throughout the month, and while PP buyers generally paid up to get materials in need, PE buyers were more reticent, as they have been holding out for a significant price break that has simply not developed. PE contracts rolled flat in Nov and producers will give their outstanding nickel a third shot in Dec. PP contracts will rise at least $.02/lb along with PGP monomer, but will likely see another $.03-.04/lb stick as producers have been rightfully pushing for margin expansion. Very hot demand from Asia, which seems to be accelerating, could help keep the supply / demand dynamic very tight as upstream inventories try to recover from the storm related production disruptions. This could make the difference between Santa and Scrooge when it comes to traditional December holiday deals.

The Spot Polyethylene market was pleasantly busy for a Thanksgiving Holiday week that many expected to be very quiet. Our trading desk was busy working transactions from many different types of buyers and we generated completed volumes that reached the higher side of average. There was good demand spread across the full slate of PE commodity resins that we make markets and also maintain inventory for added spot liquidity. Harder to find resins like LLDPE Injection did show, albeit in limited quantities, and were quickly scooped up. Also notable was a surge in demand from buyers shipping to Asia, who were very aggressive in lifting almost all that we could offer for LDPE film grades. Our spot prices held firm and settled flat across the board offering zero discounts for Black Friday. Many processors have been banking on major price relief in order to refill their coffers, and while some small discounts have come through, it has not been enough to excite restock demand. Producers did roll their $.05/lb November contract increase efforts to December, but after enduring $.19/lb of increases since June, that is hardly a big win for buyers. Traditionally, deeply discounted deals can be found in December, and we do expect to see some good buying opportunities ahead; however, if export demand continues to heat up, there might be relatively few special holiday deals to be had. If you need material, and good offers show in the first half of Dec, we suggest buying them rather than waiting for that extraordinary deal which might not actually arrive.

Polypropylene trading was fine for a holiday interrupted week; sourcing remained difficult as supplies remain categorically tight and prices ended flat with a firm undertone. Offgrade railcars continued to come and go, but there were few Prime cars to be found. Good pockets of Prime packaged HoPP and some CoPP were found in Houston, some of the material sold, and then asking prices for remaining lots were raised a couple cents anticipating higher replacement costs come December. Low and mid-melt materials generated the majority of our completed volumes, high flow resins saw better demand than supply and commanded strong premiums when offered. November PP contracts have not fully settled, but will begin with a 2-cent cost-push bump and should ultimately realize even more. We felt at least $.03/lb of a margin increase was already earned in October, as spot prices had soared, but it was not awarded then. Producers have nominated an additional $.04/lb for good measure for Dec, so perhaps some will finally implement in Nov allowing contracts to play catch up to already premium spot prices. PP Imports continued to flow in during the month, but fresh Dec offers have been minimal. South American buyers have been seeking US PP material as more Asian resin remained close to home. There seems to be more upside to PP prices ahead, but advise some caution as levels for some materials such as PP Random Clarified reach dizzying heights.

Monomer trading activity was typical leading into the holiday, completed volumes were below average and prices edged slightly higher. There were very few outright Ethylene deals to be done, though participants did swap Dec material between Louisiana and Texas on Monday. Sporadic bids and offers sprinkled into the market and a few more calendar and location swaps were completed on Wednesday, spot Nov Ethylene then changed hands fractionally higher and ended the week just above $.23/lb. The forward curve flattened a tad but remained in backwardation. Propylene activity was comparatively busy, but still rather tame. On Monday, traders completed a deal for spot Nov PGP at $.38/lb and a couple deals were finalized for future settlement during both the 1st and 2nd quarters of 2021. Buyers and sellers continued to test the market, but additional notable deals did not emerge. Spot Nov PGP settled Friday just above $.37/lb, reflecting the lower prices early in Nov for this monthly average. As a reminder, Nov PGP contracts settled up $.02/lb to $.385/lb. December PGP is already priced at $.395/lb, so we expect additional upward pricing pressure for Dec contracts.

The major energy markets were strong as November drew towards a close. WTI Crude Oil prices continued to climb, reaching $46.26/bbl, the highest level since March, before easing back on Friday to settle at $45.53/bbl, up more than $3/bbl for the week. What a reversal it has been, the Jan futures contract is up 34% since reaching its Nov low of $34.04/bbl. Brent Oil rolled to Feb and also rose more than 7% before ending the week at $48.25/bbl. Nat Gas futures moved in stark contrast to Oil during November, the Jan futures contract began the month at $3.50/mmBtu and tumbled to a low of $2.65/mmBtu on Nov 19, before beginning its recovery. Nat Gas briefly peered above $3/mmBtu on Wednesday but could not hold on to its strong gains, the Jan contract went into the weekend at $2.843/mmBtu, still with a net gain of $.073/mmBtu. Ethane was about flat at $.20/gal ($.085/lb). Propane gained an impressive $.052/gal to finish at $.568/gal ($.161/lb), a high price not seen since May 2019 and amazingly, 3 times the low of $.18/gal reached this March.

Total Offers 11,064,444 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
LLDPE - Film2,154,128$.460$.545$.440$.480
HDPE - Inj1,719,944$.470$.530$.460$.500
LDPE - Film1,604,576$.530$.630$.560$.600
HDPE - Blow Mold1,542,196$.480$.550$.490$.530
PP Copo1,053,472$.680$.780$.650$.690
PP Homo1,006,736$.590$.670$.600$.640
LLDPE - Inj821,828$.580$.670$.590$.630
HMWPE - Film617,288$.470$.530$.470$.510
LDPE - Inj544,276$.520$.600$.550$.590
 
 
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