Resin Price Report: 3rd Week Of April 2023 - Resin prices show limited movement in slow April trading
Welcome to the Resin Price Report Update for April 2023. Here are some highlights of the report:
- The spot polyethylene (PE) market experienced a pullback as prices remained flat and producers limited their supply.
- Ethylene led the way in the monomer market with strong volume, though prices were lower overall.
- Polymer Grade Propylene (PGP) saw slight gains after a recent dip.
- The energy complex saw a rise as crude oil rallied and natural gas prices remained volatile.
Resin Price Overview
Despite a relatively strong last two weeks of March, spot resin trading experienced another slow week, with activity in the first half of April resembling the generally slow first quarter. There was a lot more talk about prices than actual deals this week, and neither buyers nor sellers showed much excitement. Polyethylene railcar options were consistently available in small quantities, with standard quality being readily available, but high quality only being obtainable through a specific request. HDPE remained in plentiful supply, while PE prices were mostly stable. Even if polypropylene supplies increased, consumers were still unwilling to pay more than the steep discounts offered at the month's conclusion, which stifled production. In anticipation of the substantial PGP cost-relief price drop that would undoubtedly materialize in April, prime PP prices fell by another penny.
Detailed Resin Price Fluctuation
The spot PE market pulls back as producers limit availability and prices remain flat
This past week, the downtrend in spot polyethylene trading continued. Volumes finished and prices were both lower than usual. Producers didn't want to sell their resin for cheap prices after making that mistake at the end of the first quarter. They kept their supply limited and made it harder for buyers to find resin, even though buyers were ready to buy at a fair price.
The most turnover was in LDPE and LLDPE film grades, whereas HDPE had minimal interest this time around. During the first quarter, producers were able to negotiate contract increases totaling $.06/lb. The 3-cent hike implemented in January was expected due to a string of production setbacks, while the 1-cent hike that took effect in March was unexpected given the uptick in output and the persistence of spot prices. Another nickel rise for April has been proposed for polyethylene manufacturers, and it is quite doubtful that this will be implemented on time.
Although HoPP and CoPP still changed hands in tiny quantities, trade volume was far lower than it had been in recent weeks. The sustained downturn in the price of PGP monomer led to a dime drop in our spot PP pricing. We anticipate a big price fall for April PP contracts as the market returns a portion of the cost-push rises from the first quarter, however an April PP margin improvement might mitigate some of the negative effects of the forthcoming monomer contract. A third consecutive monthly build in domestic stockpiles, albeit modest, but again near a record level, was also revealed this week by preliminary industry data for PP, showing reactor rates up, running about 75% of nameplate capacity, domestic sales a touch below average, exports similar to the past couple months and not overly significant.
Ethylene prices drop as Monomer markets see heavy participation
Ethylene led the way with strong volume in the monomer market despite the industry's general trend toward lower pricing. Deals for Texas material were witnessed everyday upon participants' return from the holiday weekend, but the bulk of trading centered on delivery to the state of Louisiana.
At least ten sales of April and May Ethylene in Los Angeles occurred between Monday and Tuesday at $.195/lb, while two spot material swaps occurred between $.23 and $.225 in Texas. Midway through the week, transactions brought April and May rates for LA deliveries down to $.185/lb. Materials from Texas followed suit; on Tuesday, they were brokering at $.2175/lb, and on Wednesday, they were at $.215. Nearby LA months dropped another penny to $.175/lb at Friday's closing, while Texas Ethylene was last traded at $.21.
Before the market settled on Friday, agreements were signed for ethylene supplies in Texas in the third and fourth quarters at a price of $.20125 per pound. During the last week, the price of spot Texas April Ethylene fell by about $.015/lb, ending at $.21/lb.Nearby futures through July had losses of up to a half-cent, while remaining postponed months saw weekly gains.
Polymer Grade Propylene (PGP) sees slight gains after dip
Polymer Grade Propylene was pushed aside by Ethylene but still managed a few deals in the middle of the week. The forward prices for PGP changed slightly from a situation where future prices are higher than the spot price due to recent transactions at $.41 per pound for PGP supplies in the second and third quarters. However, there were no agreements for PGP deliveries in the first quarter until Wednesday afternoon. On Friday afternoon, the market received a few late-arriving bids and offers, but no transactions were reported closed.
The April weighted spot PGP average dropped by over three-quarters of a cent throughout the week, closing on Friday at roughly $.415/lb. Contrary to the downward trend seen in spot prices last week, deferred PGP contracts through the end of the year all reported weekly gains, closing at $.41/lb or higher. PGP prices have dropped significantly from a 5-week high of $.73/lb.
A reminder that March PGP finished higher by $.08/lb, at $.58/lb, bringing gains for Q1'23 contracts to $.26/lb. There is still plenty of time for the market to shift, but based on present prices, April PGP contracts are at risk of seeing a significant drop that might reach double digits.
Energy complex rises as Crude Oil rallies, Nat Gas prices remain volatile
Crude oil led the Energy sector higher as the International Energy Agency (IEA) raised concerns that OPEC+'s significant production cutbacks might worsen a supply gap as demand recovered to a predicted record 101.9 million bbl/day.
Despite weather uncertainty and conflicting demand forecasts, natural gas prices rose by week's end. After falling to a low of $79.37/bbl on Tuesday due to selling pressure, May WTI rebounded to a midweek high of $83.53/bbl, a $4.16/bbl increase. Prices for May WTI barrels averaged $82.52 on Friday, up $1.82 from the previous week.
Similarly, June Brent dropped to a low of $83.75 per barrel on Tuesday, but then jumped $4.15 per barrel to a high of $87.49 per barrel on Wednesday. Brent for June delivery gained $1.19 a barrel by the end of the week. The price of natural gas futures peaked on Tuesday at $2.247/mmBtu, fell to a low of $1.946/mmBtu on Friday, and then rose slightly before the market closed on Monday.
When the dust cleared, the price of May futures was $2.114/mmBtu, an increase of little more than a penny from the previous week. Ethane lost half a cent, dropping to $.205 per gallon (or $.087 per pound), while Propane gained a penny, rising to $.829 per gallon (or $234 per pound).
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