Market Insights – Week of July 27, 2015

July 30, 2015 • Posted in Market Insights

Energy / Economy Overview

  • Crude prices continue to fall with Brent now under $56/bbl and WTI dropping below $49
  • The EIA reported stockpiles rose by 2.5 mm. bbl. last week to a total of nearly 464 mm. bbl in stocks
  • Falling oil prices will have less of an effect on PP price than in the recent past due to tight supply for PP
  • Since North American feedstock prices for polyethylene are driven primarily by natural gas and not oil, polyethylene prices will move based on global supply and demand for polyethylene and not the price of oil
  • Economists predict that falling oil prices should have a positive impact on global economic growth, which could increase thermoplastics demand

IHS Intel – Ethylene / PE

  • July 45-day ethylene weighted average spot price sits at 34.74 cpp, a decrease of 1.67 cpp from the June
  • July ethylene NT contract price has not settled but is forecast at 32.75 cpp, a decrease of 1.0 cpp from the June NT price
  • July PE will be flat as producers have already delayed their 5 cpp increase
  • Logistics problems that had limited exports appear to have improved significantly, allowing producers to use the export market as a safety valve to prevent price erosion

IHS Intel – Propylene / PP

  • July PGP contract prices settled down 3.5-cpp from June to 36.5
  • PGP forecast for August is flat 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 indicates that spot prices have plateaued this month with the market now waiting for contract prices to catch up
  • July purchases appear to have been slightly behind June, likely indicating that there was some amount of pre-buying in June
  • High flow homopolymer for the consumer products segment along with high flow clarity random copolymer continue to be reported in tightest supply
  • Lyondell Basell is expected to complete its planned turnaround at its Lake Charles, LA, facility by the end of this month

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