| |  |
Click here for a printable version
|
| |
| Add an email to join our distribution list: | | | |
| |
| | |
Summary
Commodity resin trading steadily increased as more participants returned from their vacations and focused on January business. Prime Polyethylene and Polypropylene railcars slowly began to emerge, while offgrade resin maintained a moderate flow as we had seen through the December holidays. Spot levels continued to tick higher in the Near Year, as we expected they would, and half-cent gains were recorded across all PE and PP grades. A slightly above average volume of resin changed hands across our trading platform though overall activity was still ramping up and there were plenty of players just feeling out the market regarding supply, demand and pricing. Much of the solid early month interest came from buyers and sellers seeking planning ahead of the pending longshoreman strike on the East and Gulf Coasts that was set to start on Jan 16th; however, in a surprising early turn of events on Thursday night, the United States Maritime Alliance and the International Longshoremen’s Association (ILA), a union that represents 50,000 members who fill 25,000 jobs, were able to agree on a new six-year labor contract. The deal has yet to be ratified by the union’s membership, but the industry was still able to breathe a collective sigh of relief as the extremely disruptive port strike was averted. In the meantime, Houston-area warehouses remain packed with resin, mostly committed to export sales, and this has limited operating rates at packaging facilities considering limited local storage options. This has backed up railcars triggering demurrage fees and embargoes on some facilities. While most of the US was hit with a severe winter blast this past week as well as the devastating LA fires, there were no relevant production issues heard. The Houston area is expected to see temperatures dip into the low-mid 20s towards mid-month, which is reminiscent of Winter Storm Uri back in 2021, which essentially crippled petrochemical and resin production in Texas and paralyzed logistics before sending resin prices to record highs.
Prime Polyethylene transactions dominated our spot resin market and prices gained ground for the second straight week. Deal volumes for PE grades were nicely above average, as prices gained another half-cent. LLDPE was our major mover, followed closely by LDPE grades and then HDPE. The market was largely starved of supply the past few weeks while packaging and rail delays added another level of complexity, bringing numerous requirements for quick domestic shipments to fill in supply gaps. Prime PE resin was also highly sought from international buyers amid strong demand from China, LatAm and Africa. Rising Crude oil and international feedstock costs, as well as escalating freight from Asia is supporting moderately higher regional PE prices, though some buyers were still resisting. Polyethylene exports were massive in December, likely a record, and the industry is dealing with a myriad of logistics issues. By Friday, following news that the dockworker strike had been averted, demand spiked further. Producers seem content with their heavy 4Q sales and are intent on raising prices in both the domestic and export markets. Domestic prime asking prices generally reflect the $.05-.07/lb contract increases on the table for Jan, and meeting resistance at those levels, but in the meantime, spot prices are being successfully walked higher.
The Polypropylene market was busier and completed volumes approached the typical average as prices ticked higher. Railcar transactions were heavier as trading activity returned to normal; logistics and packaging delays are requiring more lead time, and brought strong demand for packaged PP. The improved demand was well spread between both HoPP and CoPP grade groups and comes ahead of Heartland’s extended PGP/PP unit turnarounds up in Canada that are expected to begin later this month. There was a considerable number of offgrade railcars shown to the spot market, though most were less desirable low flow / low impact and transitional resins which explains why they were still available. Our prime PP pricing gained another half-cent, the continued recovery trek higher was supported by very limited prompt availability and higher feedstock monomer costs. The trend towards rising prices was expected at the start of the year, well-forecasted by the premium to 2025 PGP costs and rising forward curve. Upcoming January PP contracts are already well-positioned to regain every bit of its $.025/lb decline in December and probably a bit more too. After an extended period of lax downstream demand due to destocking, our market making team replenished inventories during December and our pricing outlook is bullish for at least the first quarter.
Monomer market activity was robust, volumes were high and prices rose during the first full trading week in the past three. The Ethylene market in Texas left off the previous week around $.285/lb, and quickly added another half cent to $.29/lb on Monday. On Tuesday, traders moved geographical delivery locations to Louisiana where they inked Mar-April Ethylene at $.29/lb and also solidified Feb-Mar deliveries at $.30/lb. Midweek, prompt delivery in TX changed hands at $.29/lb and a penny higher in LA. The heaviest volume of the week came on Thursday, numerous transactions were noted for both TX and LA delivery alongside a few financial hedging deals also locked in place. In TX, traders first flipped Jan/Feb deliveries thrice before executing Jan Ethylene twice at $.305/lb and a couple more times at $.31/lb. Feb and March Ethylene also transacted financially with each deal done at $.30/lb. Over in LA, Jan Ethylene found two new homes at $.32/lb while March switched delivery ownership at $.305/lb. There were no new deals seen on Friday and the weighted average of spot Jan Ethylene rested for the weekend at $.3075/lb up $.02/lb. Deferred contracts saw slightly smaller gains and the backwardated curve widened a touch.
Propylene began the week with strength, Jan PGP bids materialized Monday morning at $.3925/lb and then exchanged hands at $.40/lb, up more than a cent from the previous Friday. Traders next swapped Jan/Feb Propylene deliveries a couple of times on Tuesday. Wednesday showcased the heaviest volume of the week combining completed physical and financial deals. On the physical side, spot Jan PGP was sold at $.40/lb and Jan/Mar deliveries were flipped. Financially, 2H PGP was bartered eight separate times at $.4325/lb. The next executions were seen on Friday when physical Jan PGP was done at $.40/lb and Feb was brokered twice financially at $.4075/lb. The weighted average of spot Jan PGP added a penny during the week and settled Friday afternoon just shy of $.40/lb. Back month pricing was again mixed and the normalized contango tightened a tad. Jan PGP is currently poised for a contract increase of around $.03-.04/lb from the Dec settlement at $.39/lb, with ample time for conditions to change.
The major energy markets jumped the first full week of the year. Crude oil hit fresh 3-month highs late in the week due to potential new US sanctions against Russian oil and logistics, driving demand to the open market. Natural Gas prices briefly topped the $4.00/mmBtu mark on Friday due to harsh winter weather related demand. Feb WTI Oil saw low-volatility trade most of the week, reaching its low of $72.84/bbl on Thursday before exploding $5/bbl to the upside reaching a Friday high of $77.86/bbl. The Feb WTI futures contract trimmed its gains before finishing the week at $76.57/bbl for a total gain of $2.61/bbl. Feb Brent Oil essentially followed suit and added $3.25/bbl when it ended the week at $79.76/bbl. Feb Nat Gas futures jumped around in wild daily ranges and reached as high as $4.018/mmBtu on Friday, before settling back a smidge to rest for the weekend at $3.989/mmBtu, it was a huge net gain of 63.5 cents (+18.9%). NGLs joined the fray with its own mild increases. Ethane ended Friday at $.270/gal ($.114/lb) up fractionally on the week. Propane closed Friday at $.873/gal ($.247/lb), rising nearly a cent/gal on the week.
|
|
Total Offers
16,673,792 lbs
|
Spot
|
Contract
|
| Resin | Total lbs | Low | High | Bid | Offer |
| PP Homo | 2,860,904 | $.510 | $.590 | $.520 | $.570 |
| LDPE - Film | 2,455,750 | $.525 | $.575 | $.510 | $.560 |
| PP Copo | 2,398,676 | $.535 | $.660 | $.580 | $.630 |
| LLDPE - Film | 2,276,542 | $.465 | $.540 | $.460 | $.510 |
| HDPE - Inj | 1,985,440 | $.460 | $.530 | $.460 | $.510 |
| HDPE - Blow Mold | 1,759,496 | $.460 | $.550 | $.480 | $.530 |
| LLDPE - Inj | 1,322,760 | $.520 | $.590 | $.520 | $.570 |
| HMWPE - Film | 1,102,300 | $.460 | $.525 | $.470 | $.520 |
| LDPE - Inj | 511,924 | $.570 | $.665 | $.590 | $.640 |
|
|
|
|
|
|
|
|
|
|
|
|
|