Market Insights – June 8, 2015

June 8, 2015 • Posted in Market Insights

Energy / Economy Overview

  • OPEC met Friday and agreed to maintain production at the 30-million bbl/day ceiling
  • World oil demand is forecasted to increase in the second half of 2015 and in 2016, with growth driven by non-OECD countries
  • Non-OPEC supply growth is expected to be just below 700,000 bbl/day in 2015, only about one third of the growth in 2014
  • IHS outlook for Brent crude is an average of $59/bbl in 2015 and $65/bbl in 2016
  • Propane spot prices at the Mont Belvieu hub in Texas dipped to 34 cpg last week, the lowest price since March 2002
  • Prices fell as rain in Texas caused problems with underground storage in salt caverns
  • Low prices will keep propane the favored cracker feedstock ensuring higher propylene yields

IHS Intel – Ethylene / Polyethylene

  • May ethylene NT contract marker price settled at 34.5 cpp
  • Spot prices are expected to rise as Williams Geismar is restarted this weekend and the Evangeline pipeline restarts in the next few weeks
  • May NT contract price is forecasted to increase 1 cpp to 35.5 cpp
  • NT contract prices are expected to range from 34 to 37 cpp over the balance of 2015 as there will be little change in cash costs
  • May PE contract prices settled up 5 cpp
  • Export prices have proven difficult to increase so fare in June despite the successful domestic increase
  • Late last week ExxonMobil announced a 5 cpp increase effective July 1
  • CP Chem, Dow, Formosa, LBI, and Westlake followed with only Formosa abstaining
  • China import market weakened last week as buyers sat out due to subdued demand ahead of the off-season during June and July
  • Restarts following planned shutdowns also further weakened the market
  • Prospects for the announced July 1 North American PE increase could be impacted by developments in export markets through the month of June

IHS Intel – Propylene / Polypropylene

  • May propylene monomer contract price settled at 42 cpp
  • Forecast for June contract price is for a decrease of 2 cpp from May
  • PP market continues to be extremely tight
  • Some buyers report paying a premium over contract prices for material beyond contract volume maximums
  • Pinnacle Polymers is running again and appears to be recovering from their May 11 force majeure declaration
  • Braskem announced plans for a new 1 B Lb. PP plant in either La Porte, TX or Marcus Hook, PA
  • The location hinges on monomer supply
  • June production is expected to be high with no significant outages
  • The IHS forecast for June currently does not include an increase in the spread over monomer

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