Market Update December 06, 2013

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December began with a bang and wow, what a week it was. Spot resin trading was very active and prices were mostly higher; energy and feedstock costs also surged. A number of buyers, both processors and resellers, apparently anticipating a December lull, seemed to be caught by the markets strength and instead came to procure material before the month got too far along. Suppliers were willing to let go of uncommitted resin, with hopes to restock if special mid-month opportunities arise. The major US energy markets were sharply higher. January Crude Oil futures added a dollar on Monday, jumped more than $3/bbl Tuesday and maintained its strength through the balance of the week, closing Friday at $97.65/bbl, nearly a $5/bbl gain. Natural Gas futures continued to rally. Although the January contract retreated $.085/mmBtu from its Friday high, it still managed a weekly net gain of $.16/mmBtu, settling Friday at $4.114/mmBtu, the highest price since June. Spot Ethane saw little change around $.26/gal ($.112/lb). Spot Ethylene prices pressed higher in active trading. The market began transacting around $.54/lb, similar to the previous weeks level and then rose several cents over the next few days. Ethylene for December delivery reached as high as $.57/lb, but then settled back to most recently change of hands at $.56/lb, up $.02/lb for the week. There was significant activity in forward months as well and the 2014 curve steepened a tad, peaking in April which is commanding about a $.03/lb premium to current levels. Spot Polyethylene trading was good, buyers were searching for resin all along the slate of commodity grades and prices mostly edged a half-cent higher. While there was not a heavy flow seen, there were indicative offers for Generic Prime railcars at prices similar to late November and most commodity grades are currently available in packages out of Houston. Buyers enthusiasm for contract price relief is waning as supply/demand dynamics are fairly balanced and producers have shown their ability to hold prices firm. The Propylene market also saw good activity and prices rose again. Spot PGP for December delivery traded $.025/lb higher to $.705/lb; Dec PGP contracts settled at that same price, which was a $.04/lb increase from Nov, a penny more than initially nominated. Spot PGP then continued to rise, reaching $.7125/ lb by Friday. Spot typically trades at a discount to contracts, so recent action is an early indication that PGP contracts could have further upside in Jan, but that it is still a long way off. The forward curve is fairly flat. RGP was much higher nearly reaching $.60/lb, almost a $.05/lb gain. After a fairly long period of stability Polypropylene prices have broken out to the upside - spot PP prices added $.02/lb to the previous weeks $.01/lb gain. Rising monomer costs and generally tight resin supplies brought about the upward pressure. Dec PP contracts are settling up $.04/lb along with PGP, as such, resin buyers were eager to snap up well-priced offers. Phillips Bayway plant is finally coming back onstream and when prime material is consistently produced, it could aid spot availability. In the meantime, spot PGP remains strong and indicates higher resin prices could still lie ahead. December began and the spot resin markets were off to the races. Although the flow of fresh railcars was limited, domestic resellers found good demand for their warehoused material and Houston traders that had struggled with export sales were pleased to see a resurgence of orders including to Latin America. Time is winding down, and odds are shrinking, for PE buyers to still score a contract price decrease in 2013. PP buyers are faring no better and will take a $.04/lb increase for December.
Michael Greenberg The Plastics Exchange 312.202.0002 @ResinGuru
Disclaimer: The information and data in this report is gathered from exchange observations as well as interactions with producers, distributors, brokers and processors. These are considered reliable. The accuracy and completeness of this information is not guaranteed. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such a transaction. Our market updates are complied with integrity and we hope that you find them of value. Chart values reflect our asking prices of generic prime railcars delivered in USA.

Total Offers 14,738,648 lbs

Spot High

Contract Bid Offer

Resin
LDPE - Film HDPE - Blow Mold HMWPE - Inj HDPE - Inj LDPE- Inj LLDPE - Film PP Homo - Inj PP Copo - Inj LLDPE - Inj

Total lbs Low

2,364,920 $ 0.740 $ 0.810 $ 0.735 $ 0.775 2,167,748 $ 0.665 $ 0.720 $ 0.665 $ 0.705 1,831,840 $ 0.710 $ 0.760 $ 0.705 $ 0.745 1,740,460 $ 0.670 $ 0.755 $ 0.670 #####

MARKET UPDATE

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1,553,656 $ 0.730 $ 0.790 $ 0.710 $ 0.750 1,422,460 $ 0.690 $ 0.755 $ 0.655 $ 0.695 1,403,564 $ 0.740 $ 0.830 $ 0.745 $ 0.785 1,034,000 $ 0.760 $ 0.850 $ 0.755 $ 0.795 950,000 $ 0.705 $ 0.770 $ 0.680 $ 0.720

HDPE Blow Molding 1 Year

PP Homopolymer 1 Year

Dominick Russo and Jay Schreiber Editors

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