Market Insights – Weekly August 3, 2015

August 4, 2015 • Posted in Market Insights

Market Insights – Week of August 3, 2015


Energy / Economy Overview

  • Crude prices fell again last week with Brent now around $52/bbl and WTI dropping to $47
  • Successful negotiations with Iran would add another 100,000 – 200,000 bbl/day within two to three months of a deal and up to 600,000 bbl/day after one year
  • Higher summer demand and continued production declines are tightening the North American natural gas market.
  • Hot weather across most of the US Lower 48 are likely to spur increased power sector gas demand in the next few weeks


WTI Crude Oil & Brent Crude Oil 08032015

IHS Intel – Ethylene / PE

  • Ethylene spot prices decreased this week with July Texas delivery ranging from 33.5–33.75 cpp and August delivery at 33.75 cpp
  • July 45-day ethylene weighted average spot price sits at 34.74 cpp, a decrease of 1.67 cpp from 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
  • Falling ethylene prices are being driven by declining cash costs due to falling energy prices
  • July PE settled flat as producers have already delayed their 5 cpp increase
  • Declining spot resin prices, lower crude oil prices, weak resin demand in key international markets, and growing inventory levels have led IHS to forecast a domestic contract price drop of 3 cents per pound for August
  • Contract prices could decline by as much as 5.0 cents per pound over the August / September period depending in part on energy price movement

IHS Intel – Propylene / PP

  • July PGP contract prices settled down 3.5-cpp from June to 36.5
  • Lower PGP spot prices are mainly driven by high inventories and competitive propane and butane steam cracking economics
  • PGP for August is now forecasted down 1 cpp vs. July
  • PGP contract prices in Q4 are expected to soften by 1–2 cpp due to the Dow PDH unit starting in October as well as favorable cracking economics for propane and butane
  • IHS PP contract price for July increased half a cent
  • Decoupling continues between monomer cost and market price due to strong PP demand and supply constraints




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