TPE resin pricing: PE up $0.01/lb, PP rises $0.03/lb; demand destruction imminent as PP pierces $1.00/lb

05/03/2011

The spot resin markets saw a flurry of activity as April came to a close, with the flow of material called surprisingly good by spot-trading platform, The Plastics Exchange (TPE). The material placed into the market was met with strong buyer interest, and because of this, TPE noted that the ratio of completed transactions to total inquiries was high. Commodity resins continue to rally, and with the April price increases intact, producers have already begun "walking the spot price higher", according to TPE, in support of May nominations. Continued high energy and feedstock costs are providing cost-push support for the increases, but TPE noted that with resin now priced near all-time record highs, "demand destruction is imminent."

Energy markets: U.S. energy prices rose further, with June crude oil futures adding $1.64/bbl to end the week at $113.93/bbl, while June natural gas futures continued their streak of gains, jumping $0.232/mmBtu to settle at $4.698/mmBtu. With the exception of one day in January, TPE said this was the highest close since August 2010. The crude oil : natural gas price ratio contracted to 24:1, about four times the ratio considered parity.

Ethylene spot prices consolidated with most transactions for April and May delivery posting on either side of $0.65/lb, and the key monomer staying roughly steady for the week after a period of particularly volatile trading. Storm-related power outages led to a fresh spate of cracker disruptions, which further restricted monomer production and brought nearly 10% of capacity offline. Short-term ethylene supplies are tight, contributing to the $0.07/lb premium that material for prompt delivery has over ethylene for the third quarter....
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