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  Past Reports
Weekly Market Update
ThePlasticsExchange.com
Market Update
April 3, 2020

Summary

The spot resin markets continued to transact in a very nervous fashion. There was a lot of quoting, but not as much buying as many participants were seemingly just probing the market for ideas of price and availability. Still, overall interest was active which led to good completed volumes, helped by the sheer number of opportunities presented to our trading desk. Overall sentiment is negative as the Covid-19 pandemic has led to many non-essential processors temporarily shutting down, significantly damaging demand for some products, such as automotive and other durable goods, while other products including packaging and medical supplies are seeing increased demand. Spot commodity resin prices remained under pressure, some Polyethylene grades managed steady, but others saw losses as much as $.02/lb; Polypropylene also took a 2-cent hit. Polyethylene contracts rolled flat in March; Polypropylene contracts followed PGP lower, both were down $.04/lb.

The major energy markets were volatile this past week as WTI transacted in a nearly 50% range! After cratering below $20/bbl, the Crude complex came roaring back with historic percentage basis gains. The oil markets soared after it appeared that not only OPEC+ would be looking to enact a production cut, but that other oil producing nations, specifically the US, could potentially join in for a gigantic production cut deal. By the end of the week, May WTI futures had added $6.83/bbl to settle at $28.34; it was an astonishing 32% gain. June Brent Oil saw a smaller percentage rally, but still recorded a huge weekly addition of $6.16/bbl to $34.11/bbl. Nat Gas moved in a large $.20/mmBtu range and the May futures contract ultimately settled at $1.621/mmBtu, right in the middle, for a net loss of $.05/mmBtu. NGLs staged a recovery rally; Ethane gained $.005/gal to $.10/gal ($.042/lb). Propane soared $.055/gal to $.30/gal ($.084/lb).

The monomer markets remained moderately active, visible volume was a touch below average and prices were mixed. Ethylene continued to track lower and spot material changed hands Tuesday at $.0925/lb, down a quarter cent. April rolled to lead and on Thursday, saw added pressure as spot transacted at $.085/lb while other deals completed for later 2020 deliveries. By the end of Friday, April Ethylene had hacked off $.015/lb to end the week at $.08/lb, a new low and huge move given the price level. April PGP opened the week to immediate gains of nearly 8%, prices reached back above the $.20/lb level with daily deals struck through Wednesday on material solely for future deliveries. Spot interest returned to the marketplace late in the week, and monomer was bid up, but traders were unable to match on price. On Friday April PGP settled just north of $.225/lb, a $.03/lb increase from the prior week’s close. The contango widened again, nearly all of the 2021 months rest above $.30/lb while peak Dec ’21 is now nestled at $.33/lb. The recent rally, if sustained, would limit the decrease anticipated for April contracts.

Spot Polyethylene trading was once again slightly off from the pace we had been running prior to the Covid-19 pandemic shuttering much of the world economy; however, considering the current global environment we are pleased with the opportunities that have still been flowing through our platform. Our trading team was very active and completed close to average volumes as processors and resellers were not shy to reach out and ask for updated quotes, albeit mostly for truckloads rather than railcars. The selling environment has been very competitive as many of our trading partners have sought to reduce inventory positions with the expectations that prices will move lower in the coming weeks and months. So far, the increased demand for packaging for the food and medical fields have been enough to keep PE running at a decent clip but as this continues to play out there seems to be an overall mindset that demand will eventually slow substantially. As much of this happened very quickly, resellers did not have much time to shed higher priced inventory, so the spot market has been moving down slower than many processors hoped as suppliers fight to limit losses. Most of our spot PE prices were flat this week except for LLDPE, film grades lost a penny while injection lost 2 cents on improved supplies. Producers will wrestle with contract price decrease expectations that are surely to come, perhaps draw them out slowly with hope that demand returns and perhaps the oil market can continue to recover.

Spot Polypropylene trading returned to a stronger pace, buyers adjusted to market conditions and demand improved a bit. Prices for CoPP and HoPP, however, slid another 2 cents amid improved supply and deeper offgrade discounts. This marks a 6 cents drop over the past 5 weeks, sending prices 2 cents lower than where we started the year. Prime CoPP was our most actively traded product, railcars transacted more than truckloads and reseller demand eclipsed processor buying. Although CoPP railcar supply has improved, spot truckloads for immediate shipment remained difficult to source, especially for Prime material. HoPP truckload availability was better and most commodity grades were accessible. It will be some time, but with early signs of improvement out of Italy, Spain, and US COVID hot spots, markets appear to see some sort of light at the end of this tunnel. Until then, we expect demand to be sporadic, with processors filling just in time needs and re-sellers shopping to position for when manufacturing returns to more regular levels.

Total Offers 13,359,628 lbs Spot Contract
ResinTotal lbsLowHighBidOffer
LLDPE - Film2,212,944$.350$.440$.330$.370
PP Copo2,143,460$.450$.550$.420$.460
HDPE - Inj1,932,104$.340$.440$.330$.370
LDPE - Film1,778,220$.480$.580$.500$.540
HDPE - Blow Mold1,500,036$.340$.450$.330$.370
LLDPE - Inj1,308,472$.430$.540$.440$.480
PP Homo1,253,472$.430$.545$.400$.440
LDPE - Inj708,644$.440$.520$.440$.480
HMWPE - Film522,276$.360$.410$.340$.380
 
 
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