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Polymer Market Update in North America, October 29, 2007

https://www.chemnet.com   Nov 01,2007 The Plastics Exchange
Spot resin prices were mostly steady this week as the market still seeks firm direction for its next move in November. Producers are keen to continue raising resin prices amid record high energy and elevated feedstock costs. However, real resin demand is questionable as we venture deeper into this seasonally slower 4th quarter. Monomer prices, which had been further supported by production outages have begun to diverge; RGP prices continue to rally amid additional refinery problems, but spot Ethylene has come under pressure as supply issues are resolving.

The US dollar continues to fall, breaching the $1.44/Euro level, which makes exports to Europe from Houston attractive. However, logistics constraints and delays have tempered traders' high volume orders, since unsold resin arriving overseas in December is undesirable from a timing perspective. Many traders have therefore opted to just buy for back-to-back deals instead of making general purchases for resin inventories and resales.

The falling dollar also continues to help drive Crude Oil prices higher; the front month December contract closed at $91.86/bbl on Friday, again adding nearly $5/bbl for the week. December Natural Gas futures reversed losses from the beginning of the week to edge out a $.08/mmBtu gain, settling at $7.808/mmBtu on Friday.

Spot Ethylene prices are giving back some of its recent and sharp gains that were largely the result of planned turn-arounds and unplanned cracker outages. Now that many of the crackers have returned back on-stream, spot prices have been offered down nearly $.05/lb, with Friday's last asking price of $.51/lb, against a best bid only in the high $40s/lb. Still, Ethylene prices were well buoyed during October and several Ethylene participants reportedly settled October Ethylene contracts up $.05/lb to $.575/lb.
The spot RGP market, supported by yet another fresh refinery issue, continues to trade at ever new high prices. Monomer for November delivery sold at $.56/lb on Friday, up a staggering $.07/lb from earlier month levels.

With a few days remaining in October, there is just a little time left to square positions ahead of November markets. Polyethylene producers are seeking a total of $.11/lb with implementation dates of Nov 1st and 15th. While Polypropylene producers began nominating $.04/lb price increases for November, others came in a $.06/lb as monomer continued to rally. The early increases have been mostly bumped up another $.02/lb to now average $.06/lb. **As this goes to press, a fresh producer letter revising the November increase to $.08/lb increase has just shot across my desk.
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