Volume: Increasing
Price: Steady/ higher
The spot Polyethylene market saw minimal activity this past week as many players took an extended Thanksgiving holiday break. The slow week was still much of the same anyway: there has been a stern standoff all month long as processors, well-stocked with resin inventories, have resisted the $.05/lb and $.06/lb Nov price increases that resin producers are determined to make stick in order to re-establish healthy margins. Producers, also comfortable with their current inventories, have shied away from significant spot activity during November.
Offers for railcars of generic prime Polyethylene have in general been limited as producers have restricted supply alternatives to their higher priced contracts. Processors have been equally absent from the spot market, apparently not needing the higher-priced resin. Domestic distributors, eager to sell inventories at just moderately higher prices, have instead filled many smaller spot needs as they have arisen.
The export market had provided much of the spot market excitement over the past several months, and in fact, most of 2007. The rapidly declining US Dollar has aided foreign purchases; however, the export market has quieted down as we near the year-end. There are still deals to be done, but higher producer export asking prices in November have disabled many of the export deals that normally flow through traders' hands. With all the foreign demand shown, it would seem that export sales are still strong, with a higher percentage instead made through direct channels.
As feedstock costs escalated during October, spot (and export) margins began to squeeze. Polyethylene producers responded by throttling back operating rates to produce less resin. This has left them with significantly reduced inventories, especially when coupled with strong overall sales in October, and justifies the firm position with regard to spot domestic and export sales during November.
Still, there were a good deal of spot export transactions done during November, but much of it has been sold from trader inventory. This is not necessarily a bad thing since many exporters were looking to liquidate inventories ahead of the year-end. With the US dollar nearing $1.50/Euros, we expect another spate of exports as European dealers look ahead to January business.
Deep into November, Polyethylene contracts have still not fully settled. At a minimum, producers intend to secure the Nov 1 $.05/lb increase. While previously downed Ethylene plants have returned on-stream, some are still delayed, which has propped up the spot Ethylene market a couple of cents again to $.525/lb. With added feedstock cost pressure, producers might get serious about the next $.11/lb of increases though Dec 15.
Price: Steady/ higher
The spot Polyethylene market saw minimal activity this past week as many players took an extended Thanksgiving holiday break. The slow week was still much of the same anyway: there has been a stern standoff all month long as processors, well-stocked with resin inventories, have resisted the $.05/lb and $.06/lb Nov price increases that resin producers are determined to make stick in order to re-establish healthy margins. Producers, also comfortable with their current inventories, have shied away from significant spot activity during November.
Offers for railcars of generic prime Polyethylene have in general been limited as producers have restricted supply alternatives to their higher priced contracts. Processors have been equally absent from the spot market, apparently not needing the higher-priced resin. Domestic distributors, eager to sell inventories at just moderately higher prices, have instead filled many smaller spot needs as they have arisen.
The export market had provided much of the spot market excitement over the past several months, and in fact, most of 2007. The rapidly declining US Dollar has aided foreign purchases; however, the export market has quieted down as we near the year-end. There are still deals to be done, but higher producer export asking prices in November have disabled many of the export deals that normally flow through traders' hands. With all the foreign demand shown, it would seem that export sales are still strong, with a higher percentage instead made through direct channels.
As feedstock costs escalated during October, spot (and export) margins began to squeeze. Polyethylene producers responded by throttling back operating rates to produce less resin. This has left them with significantly reduced inventories, especially when coupled with strong overall sales in October, and justifies the firm position with regard to spot domestic and export sales during November.
Still, there were a good deal of spot export transactions done during November, but much of it has been sold from trader inventory. This is not necessarily a bad thing since many exporters were looking to liquidate inventories ahead of the year-end. With the US dollar nearing $1.50/Euros, we expect another spate of exports as European dealers look ahead to January business.
Deep into November, Polyethylene contracts have still not fully settled. At a minimum, producers intend to secure the Nov 1 $.05/lb increase. While previously downed Ethylene plants have returned on-stream, some are still delayed, which has propped up the spot Ethylene market a couple of cents again to $.525/lb. With added feedstock cost pressure, producers might get serious about the next $.11/lb of increases though Dec 15.
