Resin pricing News May 29th 2012 by quick pak inc

Market Update & Summary May 29th 2012:

Spot resin trading activity was good, lower prices were welcomed by buyers filling in supply gaps from the inventory drawdown while awaiting this price relief. Although transactions were many, volumes remain small as the general consensus is that the market will continue to ease. Average Polyethylene prices shed another $.02/lb; continued spot weakness leads some to believe that May contracts, although offered by producers down $.04/lb, could ultimately settle with a larger discount. May Polypropylene contracts settled down $.10/lb along with PGP; however, spot Polypropylene prices dropped another $.04/lb this past week, catching up to the break in the spot Propylene monomer market.

The recent trend of lower Crude Oil and higher Natural Gas prices remains intact. July Crude Oil futures, which are rolling to the front month, dropped $4.69/bbl to $91.80/bbl, the lowest in about 6 months. July Natural Gas prices rallied $.233/mmBtu to end the week at $2.822/mmBtu; it now sits about $.70/mmBtu above levels from 30 days ago. The Crude Oil: Nat Gas price ratio contracted to 32.5:1, the tightest since Dec; the spread was at 51:1 just a month ago.

Spot Ethylene prices fell further in another action packed week. Monomer supplies have increased as the turnaround season nears completion; nearly 90% of total cracker capacity is currently operational. Ethylene for May delivery shed $.025/lb to last trade just below $.52/lb - spot Ethylene was priced around $.75/lb just six weeks ago. Transactions were also seen in the forward months and while prices for the balance of 2012 remains pressured, the curve has flattened considerably. Ethylene for June delivery was at $.5125/lb and July just a half-cent back. Material for delivery in the 3rd quarter was around $.50/lb with about a $.02/lb discount needed to garner 4th quarter interest. Although Ethylene margins have shrunk as the monomer price sunk, they are still very wide on a historical basis. Ethane ended the week just under $.42/gal (almost $.18/lb), providing the cracker with an inexpensive feedstock.

Spot prices for most Polyethylene grades slid another $.02/lb; the market is now down $.08/lb over the past 6 weeks. Falling energy and feedstock costs have contributed to the negative sentiment gripping the market. Producers have offered to drop May contracts by $.04/lb and in the meantime have been generally willing to meet lower-priced competitive situations with downgraded prime material. Domestic purchasing is very sluggish as processors work down their inventories, causing producers’ inventories to swell. The export market is very tough and currently not providing an ample outlet to offset these growing supplies. Houston traders are still caught with material and are just looking to unload quickly and mitigate losses, most are not ready to make new speculative purchases, regardless of price.


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