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  Past Reports
Weekly Market Update
Market Update
December 6, 2019


The spot resin markets began December with a bang, order flow from both buyers and sellers was moderate to heavy. Our spot prices for select commodity grades continued to slide and most realistic transactions came to completion with relative ease. We would be thrilled to see this week repeated throughout December, but we anticipate the market slowing during the latter part of this month. We have seen an ongoing destocking effort in the reseller and processors sectors as resin prices fall, creating strong demand for spot material which often triggers the need for urgent shipments - right up the alley for our talented logistics team. Polyethylene and Polypropylene contracts both lost around $.03/lb in Nov; we expect PE contracts to manage steady in Dec, while PP contracts will likely see further erosion this month. The export market remained busy and transacted volumes were high, multiple railcars at a crack.

The major energy markets exhibited strength as the final month of 2019 got underway. The oil complex rallied nicely and was further buoyed by an OPEC production cut agreed late in the week. WTI Crude Oil jumped a sizable $4.03/bbl, 7%, to settle Friday at $59.20/bbl, one of the largest weekly gains in this cycle. Brent Oil saw similar action, adding a solid $3.90/bbl to $64.39/bbl. Natural Gas futures bounced a bit after getting pummeled the previous week. The Jan futures contract saw heightened volatility as the proverbial pendulum swung between oversupply and better winter demand, it ultimately finished the week at $2.334/mmBtu, up $.053/mmBtu. NGLs pulled back; Ethane shed a quarter-cent to $.18/gal ($.076/lb) while Propane dropped almost 3-cents to $.52/gal ($.147/lb).

Spot monomer activity was heightened, good volumes of material changed hands as prices moved decidedly lower. The calendar flipped and prompt Ethylene rolled to December. After little initial price movement, the market turned abruptly south on Wednesday, slicing off $.02/lb for prompt delivery though participants focused on the deferred months to complete most transactions. Negative sentiment persisted, and by Friday afternoon, Dec Ethylene had wiped off a massive $.05/lb, 20%, to settle at $.185/lb. The forward curve also scaled pricing back significantly, maintaining its backwardated shape. Propylene opened the week weak with spot deals completed a quarter-cent lower at $.3125/lb, and continued to slide from there. The selling pressure was sustained and prices trickled down daily until Dec PGP dipped below $.30/lb. PGP for prompt delivery finally closed Friday near $.295/lb, a weekly loss of $.02/lb. Transactions were also noted in the forward curve and the contango widened slightly. Nov PGP contracts had decreased $.025/lb and it currently appears that Dec could face a similar fate, we will see how the rest of the month plays out.

Spot Polyethylene trading maintained its strong momentum developed during the final week of Nov and completed volumes continued to run above average. Pricing for all LDPE and LLDPE grades, both film and injection, were flat to firm, however HD grades shed a cent. Our trading desk was kept busy filling orders; however, the majority of transactions were actually booked to other distributors / resellers / exporters rather than processors. This was not super surprising as fellow suppliers have been thinning their inventories, perhaps preparing to procure sizable volumes if super special deals are presented near year-end. In the meantime, there has been a serious run on spot truckloads (even 5 or 10 at a time) to fill in supply gaps and keep their processing customers amply supplied with material. This has created a premium for ready to ship truckloads even as fresh shippable railcars are generally discounted.

The Polyethylene contract market seems to have accepted a $.03/lb decrease in November, although there is not necessarily industry-wide consensus. The decrease prompted some market participants to ask for an immediate and equal discount for spot material, so it is important to note that spot prices often change daily and this particular price reduction has already made its way into the market and then some. In fact, the discount that spot has developed to contracts and consultants’ indices has widened greatly during 2019. Our transactional prices have steadily deteriorated while contracts have netted out shockingly flat after gaining and losing 3 cents twice this year. The export market remains very healthy and has continued to grow, making new all-time volume records as different regions continue to tap North American supply as a source of ultra-competitively priced material.

Spot Polypropylene trading started the month swiftly, transactions were well split between HoPP and CoPP, while prime demand outstripped offgrade and quick truckload shipments were favored over fresh railcar orders. As we saw in PE, resellers brought the best demand to our marketplace and their needs were met with liquid material availability, so most reasonable transactions fell into place without the need to negotiate fiercely. The middle and downstream segments have been limiting purchases as they eye lower pricing ahead and are willing to pay good fair market pricing to maintain continuity of supply. Our prime Polypropylene prices peeled off another cent as upstream monomer costs fell further, pointing to another contract decrease to finish off the year.

Total Offers 16,354,538 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
PP Homo3,455,612$.420$.525$.430$.470
HDPE - Blow Mold2,271,772$.360$.480$.340$.380
HDPE - Inj2,183,680$.360$.440$.340$.380
PP Copo1,916,644$.450$.550$.450$.490
LLDPE - Film1,865,220$.375$.445$.350$.390
LDPE - Film1,675,496$.435$.535$.450$.490
LLDPE - Inj1,632,484$.440$.520$.410$.450
HMWPE - Film763,196$.380$.430$.350$.390
LDPE - Inj590,434$.440$.510$.430$.470
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