Energy and the Economy
- Oil prices fell at the end of last week but still posted a new high for the year.
- Crude oil markets seem poised for a correction due to major increases in exports from Iraq and production increases in Russia and Saudi Arabia
- An assessment by the American Gas Association estimated that the U.S. possesses a technically recoverable natural gas resource potential of 2,515 trillion cubic feet. This is the highest resource evaluation in the AGA’s 50 year history
- The Purchasing Managers Index was steady in April at 51.5 after slipping 1.4% in March
Ethylene and Polyethylene
- No C2 Contract settlement has been reached for April. Combined April/May settlement not expected until June
- May is forecasted at 37 cpp.
- Williams Geismar has restarted and Dow Taft #1 is expected to start soon
- All US ethylene units will be running for the first time in several years
- Combined March & April PE sales were the highest since January 2000. Domestic demand totaled more than 2.85 B pounds in April, 17% above April 2014. The inventory drawdown for April and May was estimated at >400 MM lbs. Operating rates over 93%
- Strong contract demand has limited the availability of incremental lbs.
- April exports totaled an estimated 766 MM Lbs. High density polyethylene exports from the US to Europe were heard, and some Middle Eastern sellers are now said to be preferring European destinations as prices are higher there than in Asia. By the end of the week there was almost a $450/ton difference between export offers from the US and delivered spot prices in Europe.
- All of the above would indicate that the pending 5 cpp May price increase will hold in its entirety.
Propylene and Polypropylene
- Spot propylene monomer markets were quiet this week
- May monomer settlement has not been reached. Buyers are seeking a 1 cpp decrease while sellers are offering 0.5 cpp. PGP currently trading at ~ $0.405 which would indicate Contract PGP Pricing at ~ $0.43 which would be flat for May.
- Spot prime PP prices increased last week due to tight supplies. Wide spec prices moved up several cents
- North American PP spot prices have moved to within 4 cpp of Asian PP prices over the last few months making exports to the USA less attractive for Asian producers
- Greatest demand is for random clarified and GP homopolymer injection grades
- Force Majeure/Maintenance Outages
- P66 still operating under FM due to Impact Copolymer issue.
- Pinnacle Polymers FM due to Monomer Supply Issues – may last through July.
- Formosa Homopolymer continues to be down for maintenance ~ 2-3 weeks. Copolymer lines going down in July and October for maintenance
- US March polypropylene (PP) exports dropped year on year on fewer shipments to China. PP cargoes to China – the third-ranked destination – fell by more than 50% as growth in that country continued to decline.
Styrene and Styrenic Polymers
- Spot benzene fell toward week’s end, trading at $2.55/USG for May and $2.50 for June despite a rise in energy prices
- Spot benzene pricing fell in Asia and Europe on reduced demand due to scheduled outages at styrene monomer plants
- The fall in global benzene prices gave rise to fear of imports into the US.
- Long term benzene forecast continues to trend up
- Styrene monomer settled up 6 cpp in April and now appears poised to move up another 5 to 7 cpp in May
- Spot styrene monomer is tight with LBI in a turnaround and COSMAR shutting down for a turnaround at the end of May