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  Past Reports
Weekly Market Update
ThePlasticsExchange.com
Market Update
May 18, 2018

Summary

A high volume of resin transacted across The Plastics Exchange trading desk this past week – the heightened activity more than made up for the below average results of the previous week, which was impacted by massive industry participation at NPE in Orlando. While this week’s deals were spread out among all major commodity grades, the bulk of the material that changed hands was Polyethylene and it focused on film grade resin. PE prices were flat to a half-cent lower, while PP prices were steady, but with a firm undertone. PE producers are taking a third swing at their $.03/lb PE price increase; PP producers are seeking to expand margins by several more cents in May, but the price increase that will actually come through might be limited to the commensurate rise in PGP monomer costs. Improved export demand is providing some support to the PE market.

The major energy markets were strong this past week all ending in positive territory. July rolled to the front month for WTI Crude Oil and managed small gains most days, ending the week up $.69/bbl to $71.37/bbl. Brent Crude Oil futures outperformed WTI notching an intra-day high above the $80/bbl level before settling back a bit, but still posted a $1.39/bbl gain to $78.51/bbl. July Natural Gas futures continued their slow but steady rise adding another $.054/mmBtu to $2.879/mmBtu. Ethane prices saw little net change, remaining just shy of $.26/gal ($.11/lb); Propane jumped nearly a nickel to $.93/gal ($.263/lb).

The monomer markets saw moderate turnover and prices were firm. Ethylene for May delivery rebounded from historic lows, adding more than a cent to almost $.14/lb. It will be interesting to see if the market is finding real support at this level or just pausing along its extended bear market move. May PGP prices continued to recover, eeking out a fractional gain to solidly retake the psychological $.50/lb threshold. Spot PGP levels continue to support a mid-single digit increase for May PGP contracts pending ongoing negotiations, results should be coming in the days ahead.

The spot Polyethylene market got back on track as participants returned from the successful NPE trade show during the previous week. Buyers, many of whom expect prices to slide, seemed to have been limiting purchases until after their face to face meetings with suppliers, and indeed, they returned to the market with vigor. The resin reseller community appears to have shaken off a sluggish April in terms of volume as May sales can already be considered healthy. The most actively traded resin on The Plastics Exchange was LDPE, mostly film grades, but injection as well. LDPE remains tightly supplied despite the half-cent loss, which was really just an easing of premium. LLDPE for film was also slightly softer, both Butene as well as the higher Alpha Olefins.

Also worth noting is export demand from China being very active from our vantage point, particularly for HMWPE and HDPE Blow Molding resins. With crude oil continuing on its upward path, North American PE producers, with abundant cheap feedstocks, continue to enjoy a sharp cost advantage, allowing for attractive (mostly direct) pricing to International buyers. This has helped take the edge off of the widely anticipated lower pricing, which has been expected to impact the domestic PE market, but has yet to substantially appear.

Polypropylene trading activity also picked up; better demand was felt from both processors and resellers, some of whom have confidence to add to their inventories. While surplus prime PP resin remains scarce, there has been a steady flow of offgrade railcars targeted to the domestic market, where prices well exceed the clearing price for incremental exports. As such, imported Polypropylene resin also continued to make its way to the US shores and help satisfy demand. Spot PP pricing was firm and seems to have some upside room as the market braces for a solid increase, a nickel or so, to be confirmed for May contracts – this based on both snug supply/demand dynamics and rising monomer costs.

Total Offers 12,974,224 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
HDPE - Inj3,954,668$.540$.630$.540$.580
PP Homo1,567,920$.610$.700$.620$.660
PP Copo1,553,552$.640$.730$.650$.690
LDPE - Film1,158,656$.640$.690$.625$.665
HMWPE - Film1,073,656$.630$.690$.600$.640
LLDPE - Film1,041,380$.570$.640$.535$.575
LLDPE - Inj979,472$.600$.690$.610$.650
HDPE - Blow Mold916,368$.580$.660$.565$.605
LDPE - Inj728,552$.600$.665$.610$.650
 
 
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