Resin pricing report: May PE contracts rolling flat

06/03/2014

Spot resin trading slowed to a more average pace and prices were mixed, according to The Plastics Exchange. Fresh railcars continued to flow into the secondary market, polypropylene more so than polyethylene. Reseller inventories are still thinning and some grades, particularly prime LDPE for film amongst others, are now outright challenging to source. Once again, it seems that PE producers have resisted the processor call for price relief as contracts are rolling flat in May. PP buyers fared slightly better, scoring a $.005/lb decrease for May, with indications for another and probably larger decline in June. Exports for both PP and PE are sluggish as relatively high Houston prices disable large spot deals.

The major US energy markets each maintained their several-week trends and moved further apart. July Crude Oil futures rose again, adding a solid $2.77/bbl and ended the week at $104.35/bbl, just off the highs. July rolled to the front month Natural Gas contract and prices softened further. The market settled Friday at $4.405/mmBtu; it was more than a dime off the lows, but still a loss of $.135/mmBtu. Spot rthane recovered the previous week's half-cent loss, reverting back to $.2875/gal ($.121/lb). The spot propane market finally had an up week, bouncing back a nickel to around $1.05/gal ($.284/lb). The Crude Oil : Natural Gas ratio widened to 23.7:1, which is about 3.5 times the level considered parity.

The spot ethylene market was a bit quieter and saw very little price change. Material for prompt delivery in either May or June changed hands about 10 times, but all within a half-cent range and on either side of the previous week's last price of $.5425/lb. The forward curve flattened a tad and is now backwardated just less than $.02/lb through Dec and about a nickel total by the end of 2015. Ethylene supply conditions in Louisiana are much improved now that CPChem's Evangeline pipeline is operational and Dow's final cracker at their Plaquemine complex is back on-stream. Nova however, has taken a cracker offline for scheduled maintenance, bringing the total offline units back to five - including those operated by ExxonMobil, Dupont, Williams and Equistar.
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