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Polymer Market Update in North America, August 13, 2007

https://www.chemnet.com   Aug 15,2007 The Plastics Exchange
The commodity resin markets were active this past week. Spot Polyethylene trading volumes were strong as most producers pushed back their August $.04/lb price increase effort until September 1st, but also nominated another $.05/lb for Sep 15th.
Spot Polypropylene offers eased a tad from the initial $.03-.04/lb bump in August, since contracts and spot trading will likely gravitate towards a more realistic $.015-.02/lb increase over July.

The energy markets were volatile this week; the Crude chain was rocked by fears of sub-prime loan defaults and their potential impact on world economies. In stark contrast, renewed fears of an active hurricane season sent Natural Gas prices soaring more than 10% to settle at $6.82/mmBtu on Friday.
Crude Oil prices moved sharply lower this past week, closing down $4/bbl even after recovering $1.50/bbl late Friday. RBOB prices were also weaker, falling $.075/gal this week as driving demand has diminished and refineries continue to run at improved operating rates, somewhat relieving inventory concerns.

Weaker Crude and RBOB prices have placed a great deal of pressure on alkylation rates, pushing them down to around $.40/lb, although it varies by refiner. This should now make PGP monomer, with prices in the lower $50s/lb, a more interesting choice for discretionary production. RGP prices have indeed recently come under pressure, trading around $.4725/lb after nearing $.50/lb less than a month ago.

Spot Ethylene prices were softer again, last trading at $.45/lb, off about $.03/lb from early August highs. It is important to note that with Natural Gas to Ethane units running at capacity, incremental Ethylene has been produced from more expensive Crude Oil, so Ethylene pricing has recently had a close tie to Crude Oil. Ethylene inventories remain very low, which could be a factor if a weather market develops.

We believe that spot resin trading activity will continue to gain good attention this month as players position their inventories and prepare for the market's next move.
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