It was a fairly busy week for spot resin trading. Contrary to the past few months, this time it was the sellers who were the aggressors into month end. In prior months, buyers had procured additional lots of resin as protective measures ahead of pending price increases; however, the market sentiment has begun to change. Now the general feeling is that even with more price increases nominated, the commodity resin markets might very well have topped and could potentially even move lower.
We have gone though a period of export-supported and cost-push price increases, but during August feedstock costs have eased and export sales seem to have slowed due to several factors. European resin buyers took a month long holiday break and backed off of their purchases especially when the US dollar staged a modest rally. Heavy exports (more than just plastics) have limited shipping container availability and sea vessel space. Additionally, producers again raised resin prices during August which squashed many export trading opportunities.
Even if the resin markets might be transitioning, price erosion may not come easy. While we are not currently in a weather affected market, the hurricane season is still underway. The newest storm, 'Felix the Cat'-egory 5 Hurricane, is projected to stay south through the Caribbean and avoid the major petrochemical infrastructure in the US Gulf of Mexico. Still, the energy markets remain volatile.
Crude Oil futures added nearly $3/bbl this past week closing at $74.04/bbl on Friday. RBOB gasoline futures also moved higher, closing up $.07/gal to just above $2.05/gal, but off $.06/gal from the week's high. Natural Gas prices continued to fall, losing $.28/mmBtu this week to close at $5.468/mmBtu, these were new lows for the front month October futures contract.
Now that European traders have returned back to the resin market, it will be important to see if they come with purchase orders in hand. Producers sure hope so, as they have recently lowered export prices to remain competitive and could use the outlet to eliminate inventories that have likely grown during August. If heavy demand redevelops, the domestic resin market might again find competition for North American produced resin.
We have gone though a period of export-supported and cost-push price increases, but during August feedstock costs have eased and export sales seem to have slowed due to several factors. European resin buyers took a month long holiday break and backed off of their purchases especially when the US dollar staged a modest rally. Heavy exports (more than just plastics) have limited shipping container availability and sea vessel space. Additionally, producers again raised resin prices during August which squashed many export trading opportunities.
Even if the resin markets might be transitioning, price erosion may not come easy. While we are not currently in a weather affected market, the hurricane season is still underway. The newest storm, 'Felix the Cat'-egory 5 Hurricane, is projected to stay south through the Caribbean and avoid the major petrochemical infrastructure in the US Gulf of Mexico. Still, the energy markets remain volatile.
Crude Oil futures added nearly $3/bbl this past week closing at $74.04/bbl on Friday. RBOB gasoline futures also moved higher, closing up $.07/gal to just above $2.05/gal, but off $.06/gal from the week's high. Natural Gas prices continued to fall, losing $.28/mmBtu this week to close at $5.468/mmBtu, these were new lows for the front month October futures contract.
Now that European traders have returned back to the resin market, it will be important to see if they come with purchase orders in hand. Producers sure hope so, as they have recently lowered export prices to remain competitive and could use the outlet to eliminate inventories that have likely grown during August. If heavy demand redevelops, the domestic resin market might again find competition for North American produced resin.
