Volume: High
Price: Steady/Higher
The spot Polyethylene market was very busy this past week. There was a flurry of railcar offers that came early on as producers sought to book as many deals as possible before Wednesday's month-end. There was also an unusually large number of trader controlled cars that still required disposition. Most of these high volume offers were sold to domestic processors and resin exporters, while some unsold cars were sent to various domestic terminals. The domestic markets then calmed toward the end of the week since producers have a $.05/lb increase set for November 1, with an additional $.06/lb slated for Nov 15.
While few fresh domestic offers were made as November began, it quickly became known that plenty of resin was available for the asking if one were to pay the $.05/lb increased price. Processors were good buyers during October as they bought material ahead of the increases, so there were no domestic takers of the higher priced resin last week.
European buyers, however, have come back to the market looking for resin, particularly HDPE blow molding and LDPE film grades. On Thursday, the initial response to the demand was that plenty of resin was available up the nickel. While domestic buyers have few supply alternatives, international buyers have a choice, as few rely on North American resin for primary supply, but rather as a secondary source if the price is right. So hiking the export price Substantially overnight disabled the volume export sale.
By Friday, fresh export offers had relaxed a few cents and resin was made available up $.02 -.03/lb over late October levels. Exporters were willing to bid at or slightly above previous transaction prices, but there were still no deals to be made at this higher offered level. Competitive supply was found, owned by traders, already bagged in Houston warehouses ready to sail, so good volumes indeed traded on Friday.
Polyethylene prices are already historically expensive, so the November price increases, which total $.11/lb, will be hotly contested by domestic processors. When the increases were initially announced, Ethylene costs were rising sharply, and with several cracker outages at hand, the risk of further monomer increases was significant. In fact, November Ethylene contracts have been nominated as much as $.10/lb higher.
More recently however, most of the Ethylene outages have begun to resolve and spot monomer prices have eased $.04-.05/lb to just under $.50/lb. In previous markets export demand had been so strong as to provide producers with a competitive outlet for high volumes of Polyethylene. Now in November, while steady prices will move resin offshore, volumes are weaker due to a seasonal slowdown in world markets.
We believe that for now Polyethylene producers will likely maintain a firm stance with regard to their $.05/lb price increase, especially with a $.06/lb increase right behind it mid-month. However, it seems that domestic buyers are well-positioned to hold out against the increase(s) and since the upward momentum have subsided in the spot monomer market, the total increases will become difficult to fully implement. Although it is still possible that (some of) the first increase could stick for a while or even become effective for November Polyethylene contracts.
Price: Steady/Higher
The spot Polyethylene market was very busy this past week. There was a flurry of railcar offers that came early on as producers sought to book as many deals as possible before Wednesday's month-end. There was also an unusually large number of trader controlled cars that still required disposition. Most of these high volume offers were sold to domestic processors and resin exporters, while some unsold cars were sent to various domestic terminals. The domestic markets then calmed toward the end of the week since producers have a $.05/lb increase set for November 1, with an additional $.06/lb slated for Nov 15.
While few fresh domestic offers were made as November began, it quickly became known that plenty of resin was available for the asking if one were to pay the $.05/lb increased price. Processors were good buyers during October as they bought material ahead of the increases, so there were no domestic takers of the higher priced resin last week.
European buyers, however, have come back to the market looking for resin, particularly HDPE blow molding and LDPE film grades. On Thursday, the initial response to the demand was that plenty of resin was available up the nickel. While domestic buyers have few supply alternatives, international buyers have a choice, as few rely on North American resin for primary supply, but rather as a secondary source if the price is right. So hiking the export price Substantially overnight disabled the volume export sale.
By Friday, fresh export offers had relaxed a few cents and resin was made available up $.02 -.03/lb over late October levels. Exporters were willing to bid at or slightly above previous transaction prices, but there were still no deals to be made at this higher offered level. Competitive supply was found, owned by traders, already bagged in Houston warehouses ready to sail, so good volumes indeed traded on Friday.
Polyethylene prices are already historically expensive, so the November price increases, which total $.11/lb, will be hotly contested by domestic processors. When the increases were initially announced, Ethylene costs were rising sharply, and with several cracker outages at hand, the risk of further monomer increases was significant. In fact, November Ethylene contracts have been nominated as much as $.10/lb higher.
More recently however, most of the Ethylene outages have begun to resolve and spot monomer prices have eased $.04-.05/lb to just under $.50/lb. In previous markets export demand had been so strong as to provide producers with a competitive outlet for high volumes of Polyethylene. Now in November, while steady prices will move resin offshore, volumes are weaker due to a seasonal slowdown in world markets.
We believe that for now Polyethylene producers will likely maintain a firm stance with regard to their $.05/lb price increase, especially with a $.06/lb increase right behind it mid-month. However, it seems that domestic buyers are well-positioned to hold out against the increase(s) and since the upward momentum have subsided in the spot monomer market, the total increases will become difficult to fully implement. Although it is still possible that (some of) the first increase could stick for a while or even become effective for November Polyethylene contracts.
