The resin markets were active this week with our spot domestic business outshining export sales for the first time in recent memory. US processors had been holding out, trying to avoid a price increase for the third month in a row. They have now begun returning to the markets and are reluctantly paying the asking price, indicating that this round of price increases has legs.
Spot monomer prices continue to charge higher on the back of production issues that have kept supplies tight. Spot Ethylene prices jumped more than $.01/lb to $.535/lb this week, bringing the past month's rally to $.07/lb. RGP prices have maintained their strength, pressing still a tad higher to almost $.51/lb on Friday. Crude Oil price added almost $1.50/bbl this week and settled at $83.69/bbl on Friday. Natural Gas prices lost about a dime to close at $6.97/mmBtu.
While resin producers have utilized a phenomenal export market to offset lackluster domestic sales, large volume offshore trades have started to slow. Although the weak US dollar has made US resin prices attractive for some time, the recent round of export offers have been priced out of reach of traders. The higher asking prices are reasonable, but still, sometimes export deals just do not work.
Given that much of the resin sold as export is produced from surplus capacity, the price of spot monomer is a good benchmark for these costs. Based on the market price to enable high volume exports, export economics have turned sour. This discourages discretionary resin production and we would not be surprised to later learn that operating rates are now being throttled back some.
Resin producers are pressured by their quickly rising feedstock costs and have a need to pass them along to downstream buyers. Export markets can basically turn off, but domestic buyers have few places to turn. We expect current price increases, which are $.04/lb for Polyethylene and mostly $.03/lb for Polypropylene, to become effective for October contracts. Since the increases are cost-push justified, monomer markets need to be monitored for guidance.
There are several cracker / refinery outages that are on the cusp of returning back on stream. Their timing will help determine if the (monomer and) resin markets will continue higher or start giving back recent spot and pending contract gains. While October resin contract prices are not yet etched in stone, they will likely be higher, so it will soon be time to start thinking about November.
Spot monomer prices continue to charge higher on the back of production issues that have kept supplies tight. Spot Ethylene prices jumped more than $.01/lb to $.535/lb this week, bringing the past month's rally to $.07/lb. RGP prices have maintained their strength, pressing still a tad higher to almost $.51/lb on Friday. Crude Oil price added almost $1.50/bbl this week and settled at $83.69/bbl on Friday. Natural Gas prices lost about a dime to close at $6.97/mmBtu.
While resin producers have utilized a phenomenal export market to offset lackluster domestic sales, large volume offshore trades have started to slow. Although the weak US dollar has made US resin prices attractive for some time, the recent round of export offers have been priced out of reach of traders. The higher asking prices are reasonable, but still, sometimes export deals just do not work.
Given that much of the resin sold as export is produced from surplus capacity, the price of spot monomer is a good benchmark for these costs. Based on the market price to enable high volume exports, export economics have turned sour. This discourages discretionary resin production and we would not be surprised to later learn that operating rates are now being throttled back some.
Resin producers are pressured by their quickly rising feedstock costs and have a need to pass them along to downstream buyers. Export markets can basically turn off, but domestic buyers have few places to turn. We expect current price increases, which are $.04/lb for Polyethylene and mostly $.03/lb for Polypropylene, to become effective for October contracts. Since the increases are cost-push justified, monomer markets need to be monitored for guidance.
There are several cracker / refinery outages that are on the cusp of returning back on stream. Their timing will help determine if the (monomer and) resin markets will continue higher or start giving back recent spot and pending contract gains. While October resin contract prices are not yet etched in stone, they will likely be higher, so it will soon be time to start thinking about November.
