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Summary
It was an incredibly interesting, active, and ultimately nervous week which marked the transition between third and fourth quarters. The resin markets and beyond grappled with major Hurricane Helene with more storms on the horizon, a swath of debilitating port strikes, major military escalations between Israel and Iran, and volatile monomer and resin markets. When the dust settled it was a surprisingly strong resin trading week, our completed volumes were high and spot prices for both Polyethylene and Polypropylene ended about a penny lower. Resin availability improved as sellers dealt with a buildup of material leading up to and during the port strike on the Gulf and East Coasts. Altogether, heavier resin supplies, quickly eroding Ethylene and Propylene monomer costs, declining spot resin prices, and negative market sentiment will challenge PE producers’ October price increase efforts while this month's PP contracts are already pointing to another moderate to large price decrease after already dropping $.04/lb in September.
The unprecedented port strikes began Tuesday morning and ended Thursday night shutting some 38 ports, which made imports and exports from the US impossible except from the West Coast. The strikes backed up shipments, PE much more than PP, and had a negative effect on pricing while sizable congestion fees were announced and suppliers worked on contingency plans, including the potential to severely throttle back resin reactor rates which contributed to a sell-off in feedstock monomers. This all created negative market sentiment while traders became apprehensive to take on new export orders or additional positions for fear of logistics delays and other unknown costs and surcharges. Though the strike was ultimately short-lived, and export shipments are again flowing, it will be some time before port congestion fully clears up and returns to normal. Still, the long supply positions ultimately led sellers to lower prices, which was reflected on our marketplace as our Prime Polyethylene and Polypropylene resins each dropped by a penny, while offgrade levels slid more.
Meanwhile, hurricane season is still a major concern for the industry as the death toll from Hurricane Helene has risen to above 200. Helene is the deadliest hurricane to impact the mainland US since Hurricane Katrina hit New Orleans in 2005. The storm also shut a number of plastics terminals and warehouses and caused countless logistics issues for the industry. Overall recovery efforts continue in the affected areas, but to make matters worse, Tropical Storm Milton in the Gulf of Mexico is expected to become a major hurricane in the coming week and is once again moving towards an already storm-battered Florida, our best hopes for those in harms’ way.
The growing military conflict in the Middle East also unleashed tremendous destruction as Israel pummeled Hezbollah, Hamas and Houthi weapons, infrastructure, and leadership personnel while Iran launched 200 ballistic missiles at Israel, most of which missed their mark. The Crude Oil market finally reacted sharply to the upside, re-establishing war-risk premiums for fears of major regional escalation including the potential for an Israeli retaliatory strike on Iranian oil assets, which could then spiral the conflict out of control. Our prayers for peace, prosperity, and tolerance for others’ beliefs; let’s all just get along and trade more resin!
Polyethylene had quite the start to October, as a heavy flow of offers and lower prices were met by solid processor demand. Buyers were eager to snatch up discounted material, especially late in the week once the port strike had ended and sentiment improved. All PE commodity grades peeled off a penny from the previous week. Discounted railcars continued to drive our volumes, outstripping our packaged truckload business. LLDPE for film was again our main mover, followed closely by HDPE, while LDPE for film, which remained tight and not liberally discounted, picked up the rear. The active trading generated a high volume of transactions across our platform, it was a welcome start to the 4th quarter.
Despite the strike, export demand for US Polyethylene remained strong, and while some international buyers were still trying to bid the market lower, there was also a sense of panic from those recognizing that if the strike were to last a month, some 2 billion pounds of Polyethylene would be withheld from international markets, revealing the world’s reliance on US resin. By the end of the week, the port strike had lifted, and we were back to booking export orders against pent-up demand. The large Crude Oil gains, if sustained, will lead to higher international feedstock costs and is already becoming supportive to international resin pricing. In the meantime, a lot of resin has backed up and has created an overhang in the domestic market. This could make it difficult to implement the current price increase, which continues to roll from previous months, but it’s also very early and plenty can change.
The spot Polypropylene market was much more active and our completed volumes outstripped Polyethylene for a second straight week. Like PE, our prime PP spot levels slipped another penny as feedstock PGP monomer costs maintained their downtrend and factored into lower-priced resins. The flow of PP offers was considered heavy and overall availability improved. Our HoPP transactions exceeded those for CoPP but it was close as copolymer supplies loosened up. Fresh railcars have mostly been offgrade, but there was some reactor time available if extra prime cars were needed from new production during October. Traders have been selling off their warehoused stocks hoping to replenish at lower prices later in the fourth quarter. While some processors are well stocked with inventory from previous purchases, we are seeing more buyers returning to the market as they have already worked down their supply buffer amid strong throughput demand. The slide in PGP and PP spot levels has upcoming October contracts in position for another sizable decrease.
Spot monomer trading activity was reduced, with some positioning seen ahead of the port strike as downstream demand from resin production would be affected. Visibly completed volumes were on the lower side and prices diverged. After three weeks of bearishness gripping the Ethylene market, during which the prompt premium was sucked away, prices began the week pressured and seemed to find a floor on Monday before inching back higher on the week from the previous Friday settlement of $.2275/lb. The sharp drop in spot Ethylene last week to near $.22/lb was well below its 3Q average that was just shy of $.30/lb and approached the 2Q average which was under $.21/lb. The heaviest volume of the week was recorded on Monday with a handful of transactions finding completion. Using dated pricing, a couple deals for both Sept and Oct Ethylene were issued at $.22/lb, participants swapped both Nov/Q1 and Oct/Nov as financials and a delivery deal flipping Oct/Nov Ethylene was brokered late Monday afternoon. On Tuesday prices began to uptick and October Ethylene found a new home at an undisclosed price. On Thursday, traders flipped Q1/Q2 PGP twice. Oct Ethylene remained at a $.2175/lb bid for Texas delivery, with bids for Nov and Dec not far behind, but sellers scattered, and all offers were pulled. The weighted average of Oct Ethylene tacked on a quarter-cent and finished its first trading week as prompt around $.23/lb. Larger gains were seen in deferred months and the forward curve moved into a normalized contango through Q1.
The weighted average of Sept PGP settled last Friday around $.462/lb, but the true market price could be found a few cents below. In 2Q PGP prices averaged around $.435/lb, a full $.065/lb lower than 3Q average which was just above $.50/lb. There was a lack of spot trade at week’s end and Sept went off the board with bids at $.4275/lb and offers at $.44./lb. With the flip of the calendar looming, the market peeled back slightly to start the week and one final deal for September PGP delivery was completed late on Monday afternoon at $.425/lb. Four financial deals for 4Q PGP were inked on Monday at $.4275/lb. On Wednesday, Dec PGP exchanged hands twice at $.43/lb and traders completed Q1 Propylene thrice at $.4425/lb. The following day brought three PGP deals for Oct delivery at $.42/lb. The market pushed higher by a little more than a penny on Friday and participants exchanged Oct/Dec PGP three times before the market came to rest for the weekend. Spot Oct PGP closed the week with bids around $.41375/lb and offers near $.4225/lb. The weighted average of Oct PGP rested its first week as prompt around $.418/lb, roughly $.045/lb below the Sept ’24 average. Back-month contracts saw slightly lighter losses, and the market moved into a normalized contango through mid-summer. Sept PGP contracts were down $.04/lb to $.51/lb. Unexpected disruptions could drastically influence prices, but without such events taking place this month, another moderate decrease is setting up for October PGP contracts.
The major energy markets ended the week mixed, with Crude Oil sharply higher after surging on Thursday, in reaction to rising geopolitical tensions following Iran’s ballistic missile attack on Israel and subsequent rhetoric suggesting that Iran’s oil fields and energy infrastructure could be targeted in retaliatory strikes. Nov WTI traded within a very wide range of $9.24/bbl, making a low of $66.33/bbl on Tuesday before soaring to a Friday high of $75.57/bbl. The Nov futures contract went into the weekend at $74.38/bbl, a net gain of $6.71/bbl, nearly 10%, from the previous Friday’s Nov close. Dec Brent essentially followed the same trend and saw gains every day, also posting the week’s low of $69.91/bbl on Tuesday before rising to a Friday high of $79.30/bbl. Dec Brent ended the week at $78.05/bbl, up $6.51/bbl from the previous Friday's Dec close. Nov Nat Gas futures similarly made a Tuesday low of $2.825/mmBtu and saw a Friday peak of $3.019/mmBtu, the highest since the beginning of July; however, the Nov contract could not hold on to the gains and finished Friday at $2.854/mmBtu, down nearly nickel on the week. NGLs gained ground as Oct Ethane finished Friday at $.226/gal ($.095/lb) up 1.37 cents from the previous week’s Oct settlement. Oct Propane rose sharply, ending Friday at $.779 ($.220/lb), having gained nearly 9 cents from the previous week’s Oct close.
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Total Offers
16,422,863 lbs
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Spot
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Contract
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| Resin | Total lbs | Low | High | Bid | Offer |
| PP Homo | 3,154,692 | $.520 | $.640 | $.570 | $.620 |
| PP Copo | 2,254,818 | $.555 | $.720 | $.650 | $.700 |
| LLDPE - Film | 2,245,524 | $.470 | $.560 | $.480 | $.530 |
| HDPE - Blow Mold | 2,142,084 | $.470 | $.585 | $.500 | $.550 |
| LDPE - Film | 2,014,872 | $.520 | $.590 | $.520 | $.570 |
| HDPE - Inj | 1,717,496 | $.465 | $.545 | $.470 | $.520 |
| LLDPE - Inj | 1,217,748 | $.525 | $.600 | $.540 | $.590 |
| HMWPE - Film | 1,099,104 | $.460 | $.550 | $.490 | $.540 |
| LDPE - Inj | 576,525 | $.570 | $.650 | $.600 | $.650 |
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