Market Insights – Week of August 10, 2015

August 10, 2015 • Posted in Market Insights

Market Insights – Week of August 10, 2015

Energy / Economy Overview

  • Crude prices fell sharply again last week with Brent trading around $48.61/bbl and WTI trading around $43.87/bbl as of Saturday afternoon
  • Global crude oversupply persists while concern is growing that a weakening Chinese economy may reduce demand
  • There are 58% fewer rigs active in the US than there were in October 2014, but oilfield-services company Baker Hughes reported this week that US rig counts have risen for the last three weeks in a row
  • This is causing some analysts to question the effectiveness of Saudi Arabia’s strategy to quash US shale oil production by holding prices down

WTI Crude Oil & Brent Crude Oil 08102015


IHS Intel – Ethylene / PE

  • Ethylene spot prices tumbled this week, with deals for August delivery ranging from 29.625 to 33.5 cpp

–August weighted average cash cost is expected to increase

–But not enough to offset the effect of the drop in spot prices

–August NT contract price is expected to decrease 0.5 cpp to 32.25 cpp

  • July PE settled flat as producers have already delayed their 5 cpp increase
  • Week before last IHS forecasted a domestic contract price drop of 3 cents per pound for August
  • A number of suppliers began to offer pricing 3 cpp down from July numbers late last week
  • Given the continued weakness in energy prices it appears that prices could decline further in September

IHS Intel – Propylene / PP

  • July PGP contract prices settled down 3.5-cpp from June at 36.5 cpp
  • PGP spot prices continue to fall based on declining energy prices
  • PGP forecast for August now calls for a 2.5 cpp drop vs. July
  • PGP contract prices in Q4 are expected to soften by 1–2 cpp due to the Dow PDH unit starting in October and due to continued favorable cracking economics for propane and butane
  • IHS PP contract price for July increased half a cent due to continued tight supplies
  • IHS has not been able to confirm whether announced August spread increases have been successfully implemented
  • IHS will continue to monitor and will report later in the month on August

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