Commodity resin prices surged the last week of January, fueled by soaring
feedstock costs resulting from a series of planned and unplanned monomer
outages. Spot Polyethylene prices jumped about $.04/lb while Polypropylene
prices added another $.02/lb. When all the dust settled, resin producers secured
a $.04/lb price increase for January Polyethylene contracts, while Polypropylene
contracts added $.03-.04/lb.
Resin buyers were out in full force last week seeking to secure material before the
end of the month. For the month of February, producers are looking to raise PE
prices by another $.03-.08/lb and PP prices by as much as $.08-.10/lb.
Current Polyethylene increases include the $.03/lb initially targeted for
December and $.05/lb nominated for February, while a fresh $.06/lb increase has
already been announced for March contracts. Polypropylene producers were
initially seeking to increase February contracts by an average of $.06/lb, but this
has been revised upward to $.08/lb outright, while at least two PP producers
intend to increase contract prices by the change in PGP monomer contracts plus
an extra $.02/lb.
The key US energy markets fell sharply this week. Crude Oil futures continued to
drop, with the March contract dropping another $1.65/bbl to end the week at
$72.89/bbl, the lowest settle in nearly 4 months. Natural Gas prices were
pummeled, losing more than 10% of their value; the March contract ended the
week at $5.131/mmBtu, $.619/mmBtu less than the previous Friday close. The
Crude: Nat Gas price ratio expanded to about 14:1.
Additional unplanned cracker outages further restricted already scarce Ethylene
supplies, driving spot prices up a whopping $.06-.07/lb last week to as much as
$.52/lb in very heavy trade. Spot Propylene monomer prices also continued to
rise; RGP added nearly $.03/lb to trade at $.55/lb. Spot PGP, which trades very
infrequently, transacted at $.61/lb. Continued upward pressure encouraged
Propylene monomer producers to revise their previous $.05/lb increase to
$.08/lb. January PGP contracts were up $.03/lb to $.57/lb.
The resin export market slowed its fervent pace last week as Asian traders
relaxed ahead of the Chinese New Year which comes in Mid-Feb. Houston
warehouses are still jammed full of material, with many packaging schedules
already full through February. With some of the Far East activity quieting, Latin
American buyers became more visible this past week.
Resin prices ended January with strength; buyers were willing to pay above their
January contract prices, which is a strong signal that producers will find success
implementing increases for February contracts. At this point it is too early to tell
how much of the increases will stick, but expect a sizable chunk