The Urethane Blog

Spot Propylene Falls Below $0.34/lb

Global uncertainties ruffle resin markets

By PlasticsToday Staff
Published: July 14th, 2015

After a couple of slow weeks, spot resin trading activity resumed a more normal pace last week, reports the PlasticsExchange. Falling energy and feedstock costs in North America and internationally are having a negative effect on resin markets.

Polyethylene (PE) railcar offers again began to flow and prices were softer the week of July 6, according to PlasticsExchange analysis. Polypropylene (PP) supplies remain spotty, with sporadic periods of improved liquidity; spot PP prices slipped this past week following PGP monomer. Concern about the strength of the Chinese economy and associated turmoil in Asian equity markets, the Iranian nuclear deal, as well as uncertainty regarding Greece's position in the EU added to global resin market weakness.

The spot ethylene market had a busy week. Ethylene for July delivery began the week under pressure, initially trading down a full penny to $0.34/lb. The market recovered and actually reached into positive territory, before retrenching for a small fractional loss for the week. The forward ethylene curve remains essentially flat, with prices through the end of 2016 all within a cent of prompt levels.

Availability improved and prices were down $0.01 to 0.02/lb in the spot PE market, with film grades giving back the most. The export market has slowed significantly, as price declines in China and general economic uncertainty in the region has turned some buyers into sellers. Weak energy, feedstock and export markets are stymying producer efforts to implement their $0.05/lb price increase for July contracts, adds the PlasticsExchange. Several have officially pushed off the increase to August, and some observers feel that it would be challenging even to hold prices flat this month.

Spot propylene prices continued to erode, breaking below $0.34/lb for the first time since June 2009.

The PP market continues to experience solid demand and insufficient supply caused by production issues, maintaining elevated spot prices. Falling feedstock costs have been driving down contract prices, as many processors' contracts still have some connection to PGP monomer. The spot PP market shed a couple of cents this past week, as July PP contracts are poised to slide a little again, but not as much as PGP monomer.