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  Past Reports
Weekly Market Update
Market Update
November 8, 2019


The spot resin markets were busy, and while our order flow was heavy, buyers were sometimes hesitant to pull the trigger and so not all do-able transactions came together, at least for original requested volumes. By the end of the week, our total trading tally fell just below average though trading margins were better than recent weeks, but still slightly squeezed. Prices for both Polyethylene and Polypropylene were weaker across the board, with PE grades sliding $.005-.015/lb, though some materials like LDPE for film and HDPE for dairy remained a tad snug. Spot PP prices dropped a deuce on weaker feedstock costs. There were some phenomenal resin deals presented to us and we bought heavily for our market making inventory as some stellar opportunities were just too compelling to pass up. Despite the $.04/lb PE increase on the table for Nov, we expect contracts to be steady at best. Spot PGP prices have been falling again and if the trend sustains, Nov PP contracts will see a moderate decrease. Houston PE and PP prices eased as suppliers chased falling bids in order to maintain the high volume of exports required to keep overly burdensome resin inventories from developing as reactors run near capacity, with additional units still slated to come on stream.

The upstream energy markets moved higher amid reduced price volatility. WTI Crude Oil ran towards the topside of its recent range as the Dec futures contract gained $1.04/bbl to end the week at $57.24/bbl. Brent Oil was not quite as strong, as the Jan contract added just $.82/bbl to settle Friday at $62.51/bbl. Nat Gas Futures maintained its bullish momentum and broke through the summer highs, reaching above $2.90/mmBtu before profit taking ensued; the Dec contract still ended the week with a nice gain of $.075/mmBtu to $2.789/mmBtu. NGLs were mixed; Ethane gained a half-cent to $.20/gal ($.084/lb) while Propane gave back that half-cent to $.515/gal ($.146/lb).

The monomer markets were very busy, volumes were heavy, particularly Propylene, and prices dropped. Spot Ethylene opened the week under pressure and participants pushed prompt prices below $.20/lb by Tuesday afternoon. Forward pricing into 2020 dropped below $.17/lb, before recovering a bit. Nov Ethylene ended the week down $.0225/lb to $.1975/lb and Dec was a penny less. In a relatively rare occurrence, visible PGP activity exceeded that for Ethylene and deals were done daily. Prompt PGP fell from the get go and pennies peeled off through the week, pausing around $.33/lb, before continuing lower to settle Friday at $.31/lb, a sharp loss of $.03/lb. These weak spot prices now point to a contract decrease in the realm of $.04/lb, but plenty can happen before negotiations complete.

Spot Polyethylene trading was good, but not great; our trading desk was busy quoting opportunities, but domestic demand lacked luster and buyers were reluctant to submit sizable orders. We have now seen this type of activity for a few weeks as buyers have seemingly been out to source their near-term needs while still considering their desire for minimal year-end inventories. Prices slid as suppliers competed for orders, which led to another week of compressed margins. On the other side of the coin, special buys can be found as traders have also been thinning their inventories, so for those willing to buy in large volumes (multiple railcars), deep discounts can be had. Our spot PE prices dropped a penny on average with variance seen amongst grades. HDPE for injection lead the way lower, which also dragged film grades down about a half-cent despite being somewhat tightly supplied for immediate shipment. The hurricane season huffed and puffed early on, but seems to be winding down without much of a whimper. Given the current state of the market, the November $.04/lb increase is now doubtful and it might even be a challenge to keep the Sept $.03/lb increase intact through year-end. However, it again appears that we could be nearing the end of the trade war with China, and should it find a positive resolution, we would expect a sizable boost in both demand and prices. The added boost would be welcomed as this Thanksgiving holiday shortened month could use a burst of energy.

Polypropylene trading picked up this week as we completed a multitude of truckload (and some railcar) transactions in Houston and around the country. Overall resin availability was good and most materials could be sourced for immediate shipment. Weaker feedstock costs are pointing to lower Nov resin contracts and suppliers got ahead of the game by offering cheaper spot PP prices, down about 2-cents, which spurred better buying. PP Copolymer demand continued to outshine Homopolymer, and this past week, processors opted for sharply discounted offgrade over pricier prime resins. As prices drop, US Polypropylene is becoming more competitive on the world market and exports continue to grow. PP export volumes are not nearly to the levels seen for PE, but indeed a larger percentage of sales have been selling offshore.

Total Offers 18,019,232 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
HDPE - Inj3,915,428$.350$.485$.360$.400
LLDPE - Film3,044,164$.370$.495$.370$.410
LDPE - Film2,246,600$.460$.560$.440$.480
HDPE - Blow Mold2,145,864$.370$.460$.360$.400
LLDPE - Inj2,024,024$.430$.545$.430$.470
PP Homo1,812,024$.470$.570$.450$.490
PP Copo1,475,012$.440$.540$.470$.510
LDPE - Inj873,196$.440$.550$.430$.470
HMWPE - Film482,920$.385$.445$.370$.410
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