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| Polymer Market Update in North America, October 8, 2007 |
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| Author:weiyingte Time:2007-11-9 Hits:64 Form:weiyingte [ Close ] |
The spot resin markets were very busy this past week, which is quite a statement since it was just the first week of the 4th quarter and expected to start slowly. Transacted volumes of commodity grade resins were high - thanks mostly to renewed interest from overseas buyers.
With a $.04/lb Polyethylene and $.03-.04/lb Polypropylene price increases in play for October, domestic spot offers have been limited and expensive. Since the previous two price increases failed to materialize, processors have been apprehensive about quickly committing to supply at the increased level. The thought is that if purchases are delayed, the increases might again fall apart come mid-month.
Producers however, are expected to stand firm this time as they face serious feedstock pressures brought about by high energy prices and cracker / refinery outages due to September hurricanes and scheduled maintenance. Spot Ethylene prices have gained about $.06/lb in recent weeks to now press above $.51/lb. Spot RGP prices have also rallied more than $.05/lb to trade at historic high levels above $.50/lb.
Resin producers, looking to get orders on the books early in the month, were pleased to find sizable export interest from European traders. Their buying activity has again come on strong spurred by a falling dollar, as the exchange rate requires more than $1.40 per Euro for the third straight week. Another cycle of strong exports might only add to the frustration of traders already faced with logistics constraints including: rail, packaging, containers and ship space.
Tight oil supplies and concerns about inclement gulf weather have kept upward pressure on energy prices. Crude Oil futures have maintained their lofty level above $80/bbl, even though this past week they settled $.44 lower to $81.22/bbl. Natural Gas futures still managed a $.20/mmBtu gain for the week as they closed at $7.073/mmBtu on Friday, which was after slipping more than $.33/mmBtu into the weekend.
With tough feedstock pressures and good export markets on their side, we expect US commodity resin producers to finally implement some or all of their current price increases for October contracts.
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