Volume: Good
Price: Steady
The spot Polyethylene market was busy during the final week of August. Resin prices had rallied earlier in the month when producers were looking to implement their $.04/lb price increase, but then stabilized when the increase was delayed until September. Market supporting exports slowed into the middle of the month, so even though producers nominated another $.05/lb increase with a mid-Sept target date (totaling $.09/lb), spot Polyethylene prices began to recede, giving back at least early August gains.
The market is now at a cross-road, with a rare situation at hand - the market price could conceivably move in either direction. So during September will the Polyethylene market gain nine or none, somewhere in between or actually give back some prior month gains? The key might be whether or not export demand returns with enough gusto to soak up excess Polyethylene production, which has been running close to full capacity.
During August, European buyers took a breather while Houston export prices continued higher; they reached the point where easy export sales were no longer possible. In addition, logistics constraints also hampered exports. Up until this time, producer resin inventories have been kept well under control. If producers continued to run hard during this time, they very likely added to their resin inventories in August.
Ethylene demand has been excellent and inventories have been drawn down, helping to propel monomer prices higher along with Polyethylene. However spot Ethylene prices have now begun to ease, recently coming off about $.025/lb. If Polyethylene producers see that their collective inventories are indeed rising, it would discourage discretionary resin production and also slow monomer demand - which is what we might currently be viewing.
Polyethylene producers have done a superb job keeping operating rates high and inventories low, export demand has served them well during this period of slackened domestic demand. Producers have held pricing power in their court and do not plan on relinquishing it. Processors facing a $.09/lb increase in September might call it a win just to stave off (some of) a large price increase, but if the tide indeed has turned, lower Polyethylene prices could be ahead in the 4th quarter.
Price: Steady
The spot Polyethylene market was busy during the final week of August. Resin prices had rallied earlier in the month when producers were looking to implement their $.04/lb price increase, but then stabilized when the increase was delayed until September. Market supporting exports slowed into the middle of the month, so even though producers nominated another $.05/lb increase with a mid-Sept target date (totaling $.09/lb), spot Polyethylene prices began to recede, giving back at least early August gains.
The market is now at a cross-road, with a rare situation at hand - the market price could conceivably move in either direction. So during September will the Polyethylene market gain nine or none, somewhere in between or actually give back some prior month gains? The key might be whether or not export demand returns with enough gusto to soak up excess Polyethylene production, which has been running close to full capacity.
During August, European buyers took a breather while Houston export prices continued higher; they reached the point where easy export sales were no longer possible. In addition, logistics constraints also hampered exports. Up until this time, producer resin inventories have been kept well under control. If producers continued to run hard during this time, they very likely added to their resin inventories in August.
Ethylene demand has been excellent and inventories have been drawn down, helping to propel monomer prices higher along with Polyethylene. However spot Ethylene prices have now begun to ease, recently coming off about $.025/lb. If Polyethylene producers see that their collective inventories are indeed rising, it would discourage discretionary resin production and also slow monomer demand - which is what we might currently be viewing.
Polyethylene producers have done a superb job keeping operating rates high and inventories low, export demand has served them well during this period of slackened domestic demand. Producers have held pricing power in their court and do not plan on relinquishing it. Processors facing a $.09/lb increase in September might call it a win just to stave off (some of) a large price increase, but if the tide indeed has turned, lower Polyethylene prices could be ahead in the 4th quarter.
