Volume: Increasing
Price: Higher
The Polypropylene market has remained embroiled in a challenging environment ever since frustratingly high feedstock costs led to demand damaging expensive resin. Resin producers are now dealing with another PGP monomer increase, this time a staggering $.0725/lb on November contracts, which settled this past week at $.615/lb. In order to maintain minimally acceptable Polypropylene production margins, the increase needs to be passed through to November resin contracts.
There is an $.08/lb price increase nominated for November Polypropylene contracts and a fresh $.05/lb increase has recently been announced for December. Although based on current demand at these record resin prices, raising the price of Polypropylene another $.07/lb just to cover the PGP increase will be difficult. However, if history repeats, resin contracts will somehow be increased a considerably close amount.
Relatively little Polypropylene resin was shown to the spot market the first 10 days of November. Some Generic Prime railcars were initially offered as much as $.09/lb higher than Oct levels, but there was no buyer interest. Over the past week, offers have settled down somewhat, with the best spot prime opportunities now $.06/lb over Oct, but still nearing the new frightfully magic number of $.70/lb.
Many Polypropylene processors bought sufficient supplies in Sep/Oct hoping to avoid making large purchases at the spiking Nov price. Widespec resin has been difficult to move, even those decently discounted to Generic Prime, and prices have not firmed solidly in the mid $60s. Given spot margins and slower spot demand, we expect to see evidence of throttled back resin production rates.
Export offers, pushed higher by the producer's desire to fully cover production costs, have been priced out of reach of high volume sales. We are now seeing a significant amount of spot resin start to accumulate. Some export sales have been made from dealer inventory.
This Polypropylene market is clearly in need of relief, but it will not come until monomer prices ease further. Additional refinery capacity is scheduled to return back on-stream, and that will help, although Crude Oil prices in the mid-$90s/bbl now justify much of the elevated monomer price. Spot RGP and PGP prices have sold off about $.02/lb from earlier levels, but we are still far from a comfortable price level.
November Polypropylene contracts will follow monomer contracts higher and likely continue to take its lead for some time to come.
Price: Higher
The Polypropylene market has remained embroiled in a challenging environment ever since frustratingly high feedstock costs led to demand damaging expensive resin. Resin producers are now dealing with another PGP monomer increase, this time a staggering $.0725/lb on November contracts, which settled this past week at $.615/lb. In order to maintain minimally acceptable Polypropylene production margins, the increase needs to be passed through to November resin contracts.
There is an $.08/lb price increase nominated for November Polypropylene contracts and a fresh $.05/lb increase has recently been announced for December. Although based on current demand at these record resin prices, raising the price of Polypropylene another $.07/lb just to cover the PGP increase will be difficult. However, if history repeats, resin contracts will somehow be increased a considerably close amount.
Relatively little Polypropylene resin was shown to the spot market the first 10 days of November. Some Generic Prime railcars were initially offered as much as $.09/lb higher than Oct levels, but there was no buyer interest. Over the past week, offers have settled down somewhat, with the best spot prime opportunities now $.06/lb over Oct, but still nearing the new frightfully magic number of $.70/lb.
Many Polypropylene processors bought sufficient supplies in Sep/Oct hoping to avoid making large purchases at the spiking Nov price. Widespec resin has been difficult to move, even those decently discounted to Generic Prime, and prices have not firmed solidly in the mid $60s. Given spot margins and slower spot demand, we expect to see evidence of throttled back resin production rates.
Export offers, pushed higher by the producer's desire to fully cover production costs, have been priced out of reach of high volume sales. We are now seeing a significant amount of spot resin start to accumulate. Some export sales have been made from dealer inventory.
This Polypropylene market is clearly in need of relief, but it will not come until monomer prices ease further. Additional refinery capacity is scheduled to return back on-stream, and that will help, although Crude Oil prices in the mid-$90s/bbl now justify much of the elevated monomer price. Spot RGP and PGP prices have sold off about $.02/lb from earlier levels, but we are still far from a comfortable price level.
November Polypropylene contracts will follow monomer contracts higher and likely continue to take its lead for some time to come.
