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  Past Reports
Weekly Market Update
Market Update
October 16, 2020


Spot resin trading pulled back from the hyper-active pace that had been in place ever since hurricane Laura impacted Louisiana’s petrochemical producing region in late August. Rapidly rising resin prices damaged demand for some incremental downstream products, helping to better balance buyer’s needs against tight supplies. After giving pause during the first half of October, Polyethylene prices eased a cent this week, which was a very small, but notable retreat from the average $.19/lb gains garnered during the previous 4 months. The Polyethylene market is still categorically tight, but the rally seems to be running its course and we cast a darkening shadow of doubt on the current $.05/lb increase nominated for October. On the other hand, the Polypropylene market still has legs and prices were flat to another penny higher this week, though it too is facing resistance to ever rising prices and showing signs of exhaustion. Export interest was better this past week as many inquiries flowed to our platform from Latin America, Europe and Africa. The relatively high Houston price works to some regions on smaller volumes, but has shut down high volume incremental dealings.

The Spot Polyethylene market had a surprisingly slow week on the heels of the rather benign Hurricane Delta whose bark proved worse than its bite. Our completed volumes fell short of average as buyers retreated from the market, breaking from the frantic rate that has been sustained for two months solid. Slack demand and signs of improving supplies sent our spot PE prices back a cent, marking the first weekly decrease since the end of April. Spot availability improved a bit, but there were still grades absent from the market, such as LLDPE high flow and roto molding materials, while other grades were just snug like the slate of HDPE blow molding grades. We saw better supplies of HDPE for injection, LLDPE and LDPE film grades begin to develop. The market is far from loose for any PE resin and this does not necessarily mean that pricing will erode, but as we stated in last weeks’ report, after $.19/lb of increases in just 4 months, the market is getting tired. There is still a $.05/lb increase on the table for October, but we do not see significant traction towards implementation. After reversing sharply from the pandemic led trough in May and long bull run recovery, our sentiment has shifted to neutral at this price and time.

Polypropylene trading slowed as spot supplies remained very scarce and given the price, buyers limited their demand to only satisfy short term requirements. CoPP resins were very hard to come by, occasionally offgrade railcars were offered and then bid out of reach except to those that were clearly in absolute need of material. Our CoPP benchmark prices trudged another cent higher, while HoPP resins held flat but firm, as they have been somewhat more available and not quite earned the same pricing support. As new and offline reactors return from maintenance, low-flow homopolymer resins are generally produced during start-up periods before higher flow and Copolymer materials are then made. The spread between CoPP and HoPP has widened further to a full $.05/lb and CoPP imports that are still on the water have seemingly already been snatched up. Spot PP prices have soared well beyond contract levels, which are largely correlated to PGP monomer levels that have been relatively stable. Producers have been able to capture some of this momentum and leverage the supply/demand imbalance to expand contract margins a bit, though a major producer curiously pushed off their October increase effort until November, we believe it could have been secured. Buyers remain hopeful that this upward pricing pressure will subside during the 4th quarter, but for now, these lofty levels remain.

Trading activity accelerated in the monomer markets, volume was heavy and prices moved in opposite directions. Multiple Ethylene trades were executed by midweek, with spot October changing hands at $.22/lb while Dec deals were completed two cents lower at $.20/lb. Participants then shifted their attentions to material located in Louisiana where the premium for spot deliveries continued to expand. Numerous transactions came together for October Ethylene there at $.28/lb, nearly 30% higher than prices seen earlier that morning for TX material. Additional deals for November Ethylene in LA at $.24/lb were also noted. Thursday brought a few more TX deals for Oct/Dec settlements and on Friday the premium between the two nearby States began to relax. Traders finalized deals for October Ethylene in LA at $.28/lb and then at $.27/lb while a deal was inked for TX spot material at $.225/lb. By the end of the day, October Ethylene settled at $.225/lb, up $.015/lb on the week. The forward curve moved in near lock step, remaining in backwardation.

Propylene saw good interest and multiple deals finalized through Wednesday; spot October PGP swapped ownership at $.3425/lb, while several Cal ‘21 PGP deals were also executed. On Thursday spot leaked a quarter-cent and another deal was completed for Oct PGP at $.34/lb with more Cal ’21 deals confirmed. Friday brought further Cal ’21 PGP agreements and October Propylene traded once more at $.34/lb where the market settled. The forward curve flattened and flipped and is now in somewhat of a backwardation. After hovering just below $.39/lb, several deferred months saw large losses as prices dropped as much as a nickel. This contraction brought all contract months to huddle right around the $.34/lb mark. As October PGP contract negotiations begin to heat up current spot levels would indicate little or no change.

The major energy markets calmed down this past week and markets ended mostly where they started. WTI Crude Oil rolled to Dec and saw a smaller trading range than had been the norm for the last several weeks. The Dec futures contract ended slightly in the black, gaining $.21/bbl to $41.12/bbl. Brent Oil also saw little net change, adding a mere $.08/bbl to $42.93/bbl. Nat Gas Futures bucked the trend and traded in a wide range amid continued volatility. The Nov contract ultimately saw little change and ended at $2.773/mmBtu, a gain of $.032/mmBtu. Ethane gained $.017/gal to $.214/gal ($.09/lb). Propane added less than a cent to $.523/gal ($.148/lb).

Total Offers 10,963,940 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
PP Homo2,407,520$.590$.680$.610$.650
LLDPE - Film2,164,128$.460$.530$.470$.510
HDPE - Inj1,818,484$.460$.540$.480$.520
LDPE - Film1,613,220$.545$.630$.580$.620
LLDPE - Inj779,196$.570$.640$.570$.610
LDPE - Inj745,736$.540$.620$.550$.590
HDPE - Blow Mold637,012$.515$.575$.500$.540
HMWPE - Film482,920$.510$.580$.520$.560
PP Copo315,724$.650$.760$.650$.690
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