http://www.stretchwrap.org/pcma A Business Podcast Series Wed, 25 Aug 2010 16:37:30 +0000 http://wordpress.org/?v=2.7.1 en hourly 1 © podcastinfo@stretchwrap.org () podcastinfo@stretchwrap.org() A Business Podcast Series podcastinfo@stretchwrap.org No no http://www.stretchwrap.org/pcma/wp-content/plugins/podpress/images/powered_by_podpress.jpg http://www.stretchwrap.org/pcma 144 144 http://www.stretchwrap.org/pcma/?p=1202 http://www.stretchwrap.org/pcma/?p=1202#comments Wed, 25 Aug 2010 16:34:06 +0000 Mark Quiner http://www.stretchwrap.org/pcma/?p=1202 http://www.stretchwrap.org/pcma/?feed=rss2&p=1202 00:01:01 July 16, 2010 to August 25, 2010, Vol. 2, Issue 08 Polyethylene contract prices in August have held steady after easing in July while spot ... July 16, 2010 to August 25, 2010, Vol. 2, Issue 08 Polyethylene contract prices in August have held steady after easing in July while spot prices have firmed this month amid talk that supply is tight. Ethylene monomer prices have risen sharply while further upstream, ethane has also firmed. No contract initiatives were issued for August PE and prices are steady this month. Producers are seeking to implement increases of 5 cpp in September. Prices were down 2 cents in July. Spot polyethylene prices have firmed this month amid limited availability. Demand for PE is reportedly healthy, and buyers have been purchasing spot when available ahead of September in the event that the increase is implemented. Generic prime LLDPE film butene is in the low 60s cpp in the domestic resale market, up from the high 50s cpp last month. In the Houston area, generic prime LLDPE film butene is in the low 50s cpp FOB Houston, up from the high 40s cpp last month. Ethylene monomer spot pricing has remained firm in August, and the pace of the increase has accelerated in the past few days. Ethylene currently stands at 41.25 cpp, up from 31-32 cpp in mid July. Prices are being driven by tight supply for ethylene and strong demand for polyethylene. Further upstream, ethane spot prices are currently at 50 cpg, up from the mid 40s cpg in mid-July. Prices were driven higher by strong demand from olefins producers as ethane is the most economical raw material for producing ethylene over other feeds such as propane, butane and natural gasoline. Even though increases in raw material prices have outpaced the rise in PE prices over the past month, there are still substantial integrated margins in the supply chain of more than 20 cpp for producing LLDPE film butene from ethane, based on current spot prices. An integrated margin refers to the total margin a chemical producer makes on producing PE from ethane. The prices of each raw material along the supply chain - from ethane, to ethylene to polyethylene - each trade independently of each other. In the current market, ethane prices have been relatively depressed due to adequate supplies, while ethylene has been driven higher by tight availability and strong polyethylene demand. This has created the current high margin situation. For more podcasts in this Stretch Wrap Markets Review series click here. _____________________________________ The PetroChem Wire is a daily newsletter serving the petrochemical industry. It counts every major chemical and refining company among its subscribers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies. Now Available 2010 Ethylene System Wall Maps to NSWA members These are excellent representations of the Gulf Coast petrochemical infrastructure and are an excellent way to deepen understanding of how production disruptions impact the broader markets. For more information contact Mark Quiner at mark@petrochemwire.com. Contact: Mark Quiner, Senior Editor +1 713 331 0464 mark@petrochemwire.com www.petrochemwire.com Copyright 2010 Podcast,Series,,Stretchwrap,Markets,Review podcastinfo@stretchwrap.org no No http://www.stretchwrap.org/pcma/?p=1185 http://www.stretchwrap.org/pcma/?p=1185#comments Fri, 30 Jul 2010 02:14:59 +0000 Mark Quiner http://www.stretchwrap.org/pcma/?p=1185 http://www.stretchwrap.org/pcma/?feed=rss2&p=1185 00:01:01 June 16, 2010 to July 30, 2010, Vol. 2, Issue 07 Polyethylene spot prices eased in June and were largely steady in July while contract ... June 16, 2010 to July 30, 2010, Vol. 2, Issue 07 Polyethylene spot prices eased in June and were largely steady in July while contract prices continued to slide. Ethylene spot prices were largely range-bound in the high 20s cpp-low 30s cpp while further upstream, ethane prices eased about 10 cents. In the polyethylene contract market in June, prices were down about 6 cpp for all grades of polyethylene, with the exception of LDPE, which was down about 4 cpp. Prices for July are still under discussion, but several participants said there have been agreements to decrease prices for all grades by 2 cpp, with the exception of LDPE, which would again remain flat. Spot domestic resale prices for LLDPE film were down about 2 cpp from mid-June to early July, and have largely held steady in the high 50s cpp-low 60s cpp in July. Exports have been thin, with interested limited to Latin America in July. Participants said that polyethylene availability has generally tightened up this month as inventories at the processor level were low and demand has picked up to restock. Producers are reportedly operating polyethylene production facilities at reduced rates, continuing efforts to match PE production to domestic demand. Upstream, ethylene prices fell from 33.5 cpp in the middle of June to a 2010 low of 28.5 cpp in early July. Spot ethylene has since rebounded, and is now trading in the mid 30s cpp. The ethylene forward curve remains backwardated through the end of the year, meaning that July ethylene is trading at a premium to ethylene for delivery in the future. This is driven by the recent rise in July ethylene prices, which has widened the premium to the outer months. Ethane spot prices fell from the mid 50s cpp in mid-June to the mid 40s cpp in the middle of July and have remained there since. This month, the ethane market moved into contango through the end of the year, meaning that ethane for delivery in the future was at a premium to July ethane. The market is now in contango because of weakness in July ethane. From a polyethylene perspective, the implication is that a producer's margin to produce ethylene and polyethylene from ethane compresses into the future. For more podcasts in this Stretch Wrap Markets Review series click here. _____________________________________ The PetroChem Wire is a daily newsletter serving the petrochemical industry. It counts every major chemical and refining company among its subscribers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies. Now Available 2010 Ethylene System Wall Maps to NSWA members These are excellent representations of the Gulf Coast petrochemical infrastructure and are an excellent way to deepen understanding of how production disruptions impact the broader markets. For more information contact Mark Quiner at mark@petrochemwire.com. Contact: Mark Quiner, Senior Editor +1 713 331 0464 mark@petrochemwire.com www.petrochemwire.com Copyright 2010 Podcast,Series,,Stretchwrap,Markets,Review podcastinfo@stretchwrap.org no No http://www.stretchwrap.org/pcma/?p=1178 http://www.stretchwrap.org/pcma/?p=1178#comments Thu, 24 Jun 2010 20:19:27 +0000 Mark Quiner http://www.stretchwrap.org/pcma/?p=1178 http://www.stretchwrap.org/pcma/?feed=rss2&p=1178 00:01:01 May 16, 2010 to June 15, 2010, Vol. 2, Issue 06 PE prices fell from the middle of May to the middle of June, pulled ... May 16, 2010 to June 15, 2010, Vol. 2, Issue 06 PE prices fell from the middle of May to the middle of June, pulled lower by falling ethylene monomer prices. May polyethylene contracts fell 6 cpp from April levels, with the exception of LDPE, which was down about 4 cpp. In June participants said that producers were initially discussing an additional 4 cpp decrease in pricing, however buyers were pushing for a larger drop. A final outcome has not been determined. Domestic spot resale prices for PE moved lower from mid-May to mid-June. Generic prime LLDPE film butene is currently transacting in the high 50s cpp in the domestic resale market, down from the high 60s cpp in mid-June. Off grade LLDPE film butene is in the low-mid 50s cpp. In the Houston area, generic prime railcars of LLDPE film butene are currently trading in the low 60s cpp on an FOB Houston basis. Upstream, ethylene monomer prices have fallen since mid-May. June ethylene is currently in the 34-34.5 cpp range, down from 42 cpp in mid-May and a 2010 peak of 74 cpp in April. The premium of front-month ethylene over the fourth quarter of 2010 currently stands at about 5 cpp, compared with a premium of about 40 cpp in April. The flattening forward curve underscores the sentiment shift from earlier this year, when prices were rising amid low inventories and significant cracker outages. All Gulf coast steam crackers were operating for much of May, the first since the third quarter of 2009. However, Chevron Phillips' Port Arthur cracker went down unexpectedly on June 18 and a restart date has not been confirmed. This cracker has a nameplate capacity of 1.8 billion pounds/year, or 3% of Gulf coast capacity. For more podcasts in this Stretch Wrap Markets Review series click here. _____________________________________ The PetroChem Wire is a daily newsletter serving the petrochemical industry. It counts every major chemical and refining company among its subscribers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies. Now Available 2010 Ethylene System Wall Maps to NSWA members These are excellent representations of the Gulf Coast petrochemical infrastructure and are an excellent way to deepen understanding of how production disruptions impact the broader markets. For more information contact Mark Quiner at mark@petrochemwire.com. Contact: Mark Quiner, Senior Editor +1 713 331 0464 mark@petrochemwire.com www.petrochemwire.com Copyright 2010 Podcast,Series,,Stretchwrap,Markets,Review podcastinfo@stretchwrap.org no No http://www.stretchwrap.org/pcma/?p=1153 http://www.stretchwrap.org/pcma/?p=1153#comments Fri, 04 Jun 2010 05:00:30 +0000 Kathy Hall http://www.stretchwrap.org/pcma/?p=1153 http://www.stretchwrap.org/pcma/?feed=rss2&p=1153 00:01:01 As the US resin markets continue to experience growing pains as they evolve and become more transparent, one thing has become clear in the domestic ... As the US resin markets continue to experience growing pains as they evolve and become more transparent, one thing has become clear in the domestic market: buyers are expanding their options. After several periods during the past two years characterized by high prices and tight supply, consumers are looking at not only changing the way they price resin, but in some cases, the resin itself. Resin brokers have reported a significant increase since 2008 in demand for off-grade resins, wide-spec resins and recycled resins. Of these, off-grade and wide-spec are the most easily priced. Spot resin pricing has become more transparent as monomer pricing has become more transparent. More and more, contract prices are becoming minimized while spot prices are becoming more relevant to processors. With spot pricing so well-defined for unbranded generic prime grade resins, off-grade resin prices are typically seen at a discount to these. However, the increase of usage of recycled resins introduces a much different dynamic into the resin markets. The recycled resin supply chain is not as straightforward as it is for generic prime grade and off-grade resin. Sometimes the recycled resin price chain includes a source of material which is free. This includes material gathered by municipalities, which is known as "post-consumer" origin. Another source of origin is from resin producers, compounders and prime grade consumers who would otherwise dispose of certain portions of their resin runs, which is known as "post-industrial" origin. When scrap plastic material begins as free, its only cost to bring it to market is to wash it and grind it or chop it. This is typically a fixed cost. Let's say it's 30 cents per pound. A municipality can sell its clean, ground-up scrap plastic to a company that melts it and processes it into pellets, and then it reaches the market. Adding a further cost of say 10 cents per pound, the material now costs 40 cents per pound to make. Building in some profit, let's say that the material is offered to the market at 45 cents. At the same time, prime grade unbranded resin is being offered at 75 cents, and wide-spec is being offered at 60 cents. Without following trends in the market for specifically recycled resin, a consumer may believe that buying reprocessed resin at, say, 55 cents is a steal. There are two major tiers of the recycled resin markets: the reprocessed resin known as "repro" which is in a pellet form similar to prime resin and reground resin know as "regrind" which is in a flake form, or a chopped-up form.nbsp; Both repro and regrind maintain certain properties that are similar to prime and wide-spec resins, such as their color.nbsp; Most repro and regrind is colored or black, but some is not, and that is referred to as "natural".nbsp; Natural colored resin is more expensive than colored or black resin. The qualities of repro and regrind resin are, of course, inferior to prime grade and to most to good quality wide-spec resin.nbsp; Processors need to adjust their machinery to make sure that it can accept this resin.nbsp; But many are making that investment not just for a consistent cost benefit but also because it gives manufacturers the ability to proclaim that their product contains recycled plastic, which is a socially desirable distinguisher. How are these resins priced? Typically, they do follow the prime grade markets to an extent, meaning that sellers will discuss pricing in relative terms, issuing price increases and such on a monthly basis. But pricing has been fractured into different brackets, such as regional, and is often an individual negotiation rather than an agreement based on a market-wide price. Additionally, supply-demand fundamentals do not always follow the prime grade markets - in fact, when generic prime grade pricing becomes prohibitive, its demand drops and the demand for wide-spec and recycled resins increases. The proliferation of demand for spot market recy... Events,amp;,News podcastinfo@stretchwrap.org no No http://www.stretchwrap.org/pcma/?p=1124 http://www.stretchwrap.org/pcma/?p=1124#comments Thu, 20 May 2010 20:13:22 +0000 Kathy Hall http://www.stretchwrap.org/pcma/?p=1124 http://www.stretchwrap.org/pcma/?feed=rss2&p=1124 00:01:01 In the past few years, we have seen the US ethylene market evolve to become a more transparent, liquid market. This has increased its usefulness ... In the past few years, we have seen the US ethylene market evolve to become a more transparent, liquid market. This has increased its usefulness as a way for many companies to manage risk. It also serves as a new foundation for those making decisions in markets all along the ethylene supply chain - most notably, in packaging. During the past year, companies along the supply chain have begun to ask: How can I trade ethylene? Knowing the price is important, but some market watchers want to take the next step, and become market participants. This enables them to not only manage their own risk, but it includes them in the sphere of influence concerning the price of ethylene. The US ethylene market saw the entrance of a new type of player in the past several years: the trader. The trader has no commercial manufacturing interest in the price of ethylene - like energy traders, ethylene traders have a financial interest in the price of the commodity, and often represent the interest of clients, which may include producers and consumers, but commodity traders are a different kind of force in the US ethylene market than it has seen in its history. However, to trade US ethylene, a company needed to secure storage for it, and that is not widely available - in fact, only one company leases its storage wells at Mont Belvieu. A handful of trading companies do lease this storage, but there is only so much storage available. A way to trade any market without needing to consider product delivery is a financially-settled swap contract. This is essentially setting a price that will be valued in comparison to an index that is determined by activity in the physical cash market. For example, the NYMEX offers swap contracts for many products, such as NGL contracts that are valued compared to the average price published by OPIS (a market reporting service), or electricity contracts that are valued compared to the average price published by each region's ISO (independent system operator). The lack of a reliable index has previously kept ethylene from developing a strong swaps market. With the increase in liquidity and the resultant transparency that the ethylene market has seen during the past few years, indices have also become more reliable. On April 26, the NYMEX introduced the world's first ethylene swaps contract which is a financial contract that settles against the PetroChem Wire's average daily closing price for US cash ethylene that trades at Mont Belvieu. Swaps have traded against the Petrochem Wire's published prices, but the introduction of this contract by the NYMEX is a significant step in the commodity's evolution. For the plastic packaging sector, the availability of a risk management tool for ethylene that does not involve commitment to deliver or receive the commodity could be revolutionary. Trading swaps enable the participating parties to set a new price for themselves and then track the movement of the index as the swap's expiration time approaches. The parties who engage swaps markets directly will continue to be largely made up of traders, but they have a renewed interest in the swaps they trade shy; the price of the underlying commodity in the cash markets. In this sense, the proliferation of swaps creates new incentives for liquidity to increase in the cash market, and it highlights the needs of the forward markets. Currently, ethylene trades most actively in what is called its "front months" shy; the first several months of delivery. For example, most of the cash physical ethylene that traded during April was for April or for May delivery. However, each day, traders and indices mark a forward curve for ethylene that stretches out until 2012. While the markets beyond three months from now do not trade often, they have become more actively discussed recently and firm bids and offers are frequently seen for twelve months into the future. These aren't forecasts. They are the price of a commodity today for ... Pricing podcastinfo@stretchwrap.org no No http://www.stretchwrap.org/pcma/?p=1112 http://www.stretchwrap.org/pcma/?p=1112#comments Mon, 17 May 2010 05:00:28 +0000 Mark Quiner http://www.stretchwrap.org/pcma/?p=1112 http://www.stretchwrap.org/pcma/?feed=rss2&p=1112 00:01:01 April 16, 2010 to May 15, 2010, Vol. 2, Issue 05 Polyethylene prices were largely stable from the middle of April to the middle of ... April 16, 2010 to May 15, 2010, Vol. 2, Issue 05 Polyethylene prices were largely stable from the middle of April to the middle of May while upstream, ethylene monomer prices fell about 40%. Producers were seeking to implement increases of 5 cpp in April contract prices for polyethylene. Market participants said agreements were ultimately reached to keep prices flat in April, and are now seeking to implement this increase in May. While the 5-cent increase in May remains under discussion, some participants said agreements have been reached to keep prices flat. PE contract prices are up roughly 18 cents so far this year: 7 cents in January, 5 cents in February, and 6 cents in March. Spot polyethylene prices were stable from mid-April to mid-May. LLDPE film butene grade remained in the low 70s cpp in the domestic resale market for generic prime material. LLDPE film exports were thin. Prices were generally discussed in the mid 60s cpp on an FOB Houston basis. Ethylene monomer took a nose dive from mid-April to mid-May. May ethylene is currently trading in the 42-45 cpp range, down from levels around 70 cpp on April 16. Spot ethylene prices ran up to 70 cpp in March and early April amid a series of unplanned cracker outages. Chevron Phillips' Cedar Bayou cracker remains shut and is in the process of returning to service after going down for maintenance in early March. INEOS' olefins 1 cracker in Chocolate Bayou remains shut for maintenance and is expected to restart in mid-May. Dow's LHC-2 cracker in Plaquemine remains shut, also for maintenance, and is expected to restart in late May. These crackers account for about 8% of Gulf coast cracking capacity. Despite the precipitous fall in ethylene monomer, ethylene profit margins from ethane cracking in May remained around 20 cpp. While these margins are down from levels seen in March, they are still well above the single-digit levels from December and early January. Ethylene margins were calculated using the standard Industry formula:nbsp; Ethylene - (Ethane x 0.422) For more podcasts in this Stretch Wrap Markets Review series click here. _____________________________________ The PetroChem Wire is a daily newsletter serving the petrochemical industry. It counts every major chemical and refining company among its subscribers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies. Now Available 2010 Ethylene System Wall Maps to NSWA members These are excellent representations of the Gulf Coast petrochemical infrastructure and are an excellent way to deepen understanding of how production disruptions impact the broader markets. For more information contact Mark Quiner at mark@petrochemwire.com. Contact: Mark Quiner, Senior Editor +1 713 331 0464 mark@petrochemwire.com www.petrochemwire.com Copyright 2010 Podcast,Series,,Stretchwrap,Markets,Review podcastinfo@stretchwrap.org no No http://www.stretchwrap.org/pcma/?p=1098 http://www.stretchwrap.org/pcma/?p=1098#comments Fri, 30 Apr 2010 19:18:43 +0000 Kathy Hall http://www.stretchwrap.org/pcma/?p=1098 http://www.stretchwrap.org/pcma/?feed=rss2&p=1098 00:01:01 Ethylene prices reached near-record levels in March and April of 2010, driving fear into the hearts of dozens of downstream markets, still smarting from the ... Ethylene prices reached near-record levels in March and April of 2010, driving fear into the hearts of dozens of downstream markets, still smarting from the tumult of 2008. Many are expecting a replay of that time: record-high prices, a resultant demand drop and a price slide that is breath-taking and margin-erasing. There's one major difference in the 2010 version of this scenario: ethylene is playing the part of crude oil. As we well remember, the last time ethylene was 70 cents per pound, crude oil was $147/bbl. Ethylene feedstocks like ethane were $1.50 per gallon and butane was nearly $2.50 per gallon. Polyethylenes were nearly 90 cents per pound in the spot market. It was July of 2008. On March 1, 2010, ethylene again reached 70 cents per pound, trading up about 15 cents inside of a week. It stayed at the level for a solid week and then began gradually trading down to nearly 60 cents per pound by the end of March. On April 1, ethylene again traded at 70 cents per pound. While this was happening in March, crude oil was between $80 and $81 per barrel, ethane was 75 cents per gallon and butane was about $1.50 per gallon. When it happened again in April, crude oil was trading between $82 and $84 per barrel, ethane had fallen below 60 cents per gallon and butane was still about $1.50 per gallon. We are not watching history repeat itself When ethylene was 70 cents in 2008, producers were barely staying ahead of costs - and margins for some producers were negative. When ethylene was 70 cents in March of 2010, its margin was as much as 30 cents per pound. When ethylene was 70 cents in April of 2010, its margin was more than 40 cents per pound for some producers. The 2010 market has been about supply, not cost. The year started out with robust global demand for US ethylene and polyethylene, and plants ran hard and inventory was lean. Some unusually cold weather in Texas and Louisiana knocked out some ethylene production during January and February, and several other plants suffered mechanical problems that caused brief shutdowns. This, combined with several scheduled maintenance turnarounds, made for a very tight ethylene market and a lot of polyethylene plants piling on demand requests for their monomer. As some monomer plants struggled to restart, several others shut unexpectedly. It seemed as though everyone wanted ethylene, and no one had any to spare. In this environment, sellers could name their price. Ethylene sellers, that is. Polyethylene prices increased but could not get above 75 cents per pound in the spot market. In the meanwhile, ethylene contract price negotiations for January and February became so contentious that no agreement was reached for either month until early March. In the absence of a contract price during January and February, the spot price was king, and downstream polyethylene markets swallowed nearly 20 cents in price increases during the first quarter of 2010. In the end, ethylene prices increased 12 cents per pound, rising to 55.5 cents by March. At this writing, April ethylene contract agreements have not concluded. Polyethylene producers that sought a 5-cent increase during April appear to have largely abandoned their efforts by the month's end. When the price crash of 2008 came, it took several months for it to really hit the ethylene and polyethylene markets. After the July 2008 run-up to 70 cents, spot ethylene traded down to around 45 cents by mid-August, but rebounded into the 50-cent range as Hurricane Gustav hit Louisiana, and ethylene prices stayed in that range as Hurricane Ike hit Texas in September. The double punches to the region's ethylene plants brought operating rates to less than 50%. In the polyethylene markets, prices did not rise during this time but their freefall was stemmed by the production paralysis, particularly as it related to rail system activity, which was stopped for several weeks during August and September. As operation rates in Events,amp;,News podcastinfo@stretchwrap.org no No http://www.stretchwrap.org/pcma/?p=1089 http://www.stretchwrap.org/pcma/?p=1089#comments Fri, 23 Apr 2010 15:50:04 +0000 stretchwrap http://www.stretchwrap.org/pcma/?p=1089 http://www.stretchwrap.org/pcma/?feed=rss2&p=1089 00:01:01 March 16, 2010 to April 15, 2010, Vol. 2, Issue 04 Polyethylene spot prices were steady from mid-March to mid-April after moving up at the ... March 16, 2010 to April 15, 2010, Vol. 2, Issue 04 Polyethylene spot prices were steady from mid-March to mid-April after moving up at the beginning of March. PE prices were supported by continued strength in ethylene monomer spot prices, while further upstream, ethane fell. Producers were seeking to implement contract price increases of 5 cpp in April, which remain under discussion. Producers implemented increases of about 6 cpp in March, for a total of 18 cents worth of increases so far this year. In the spot market, material has been transacting thus far in April at levels flat to last month. Generic prime railcars of LLDPE film butene have been transacting in the mid 70s cpp in the domestic resale market. Spot prices for ethylene monomer rose to 74 cpp in the front month, up 10 cents from 64 cpp in mid-March. The forward curve remained steeply backwardated, with ethylene in the fourth quarter discussed in the high 30s cpp, underscoring the strength of the market in the prompt month. While many of the steam crackers have resumed operations, ethylene supply reportedly remained tight during this time period. Remaining shut in April was Chevron Phillips' Cedar Bayou cracker, INEOS' olefins 1 cracker in Chocolate Bayou, and Dow's LHC-2 cracker in Plaquemine, all for planned maintenance. These three crackers account for about 12% of Gulf coast cracking capacity. Ethane remained disconnected from ethylene prices, falling 10 cents to 49 cpp from mid-March to mid-April. Ethylene producers had reportedly been favoring heavy feedstocks early in April, but have started to switch back to ethane as prices fell. For more podcasts in this Stretch Wrap Markets Review series click here. _____________________________________ The PetroChem Wire is a daily newsletter serving the petrochemical industry. It counts every major chemical and refining company among its subscribers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies. Now Available 2010 Ethylene System Wall Maps to NSWA members These are excellent representations of the Gulf Coast petrochemical infrastructure and are an excellent way to deepen understanding of how production disruptions impact the broader markets. For more information contact Mark Quiner at mark@petrochemwire.com. Contact: Mark Quiner, Senior Editor +1 713 331 0464 mark@petrochemwire.com www.petrochemwire.com Copyright 2010 Podcast,Series,,Stretchwrap,Markets,Review podcastinfo@stretchwrap.org no No http://www.stretchwrap.org/pcma/?p=1007 http://www.stretchwrap.org/pcma/?p=1007#comments Thu, 25 Mar 2010 20:34:18 +0000 stretchwrap http://www.stretchwrap.org/pcma/?p=1007 http://www.stretchwrap.org/pcma/?feed=rss2&p=1007 00:01:01 February 16, 2010 to March 15, 2010, Vol. 2, Issue 03 Polyethylene spot prices moved higher from the middle of February to the middle of ... February 16, 2010 to March 15, 2010, Vol. 2, Issue 03 Polyethylene spot prices moved higher from the middle of February to the middle of March, driven higher by rising raw materials costs, production disruptions and tight supply. Producers were seeking to implement a 6 cpp increase in March PE contract prices, which market participants said is largely being reflected in pricing. This is in addition to a 5-cent increase in January and an 8 cpp increase in February. Producers are also seeking to implement another 5 cpp increase in April. In the domestic spot market, generic prime railcars of LLDPE film butene grade is currently trading in the mid 70s cpp range in the domestic resale market. Prices are up from the high 60s cpp in February. Exports have slowed considerably this month following the sharp rise in prices. LLDPE film for export is being discussed in the low 70s cpp on an FOB Houston basis, but little business is being concluded at those levels. Supply has been tight this month, largely due to constraints in availability of ethylene monomer, the raw material used to produce polyethylene. Chevron Phillips and Dow have product allocations on polyethylene. Meanwhile, Equistar lifted an allocation on polyethylene, which was put in place in early February. Ethylene monomer traded sharply higher during this time period. Ethylene for March delivery rose 17 cents to 70 cpp from the middle of February to early March. Meanwhile, the backwardation in the forward curve became more pronounced, pointing to strong demand for prompt ethylene. Ethylene for delivery in the fourth quarter was trading around 38 cpp. Multiple steam cracker outages throughout 2010 have kept supply tight, and this continued into March driving prices even higher. At the beginning of March, Chevron Phillips Sweeny 33 cracker (see Figure 1) in south Texas shut down unexpectedly. The company also began planned maintenance at its Cedar Bayou olefins unit, east of Houston. Eastman's Longview crackers in east Texas went down unexpectedly in mid-February and remained shut through the middle of March. Shell's GO-1 cracker in Norco (see Figure 2), near New Orleans, was shut in mid-February for maintenance and restarted in early March. Dow's St. Charles olefins unit (see Figure 2), also near New Orleans, went down unexpectedly at the end of February and restarted in early March. About 17% of Gulf coast steam cracker capacity was shut early in March, but restarts later in the month brought this figure to 10%. Further upstream, ethane prices were relatively stable in the low-mid 70s cpp, and then fell to the low-mid 60s cpp in the middle of March, dramatically expanding the ethylene profit margin. The ethylene profit margin for pounds produced in March expanded from the low 20s cpp in mid-February to the mid 30s cpp in the middle of March. Margins for front-month ethylene are up from about 5 cpp in early January. For more podcasts in thisnbsp;Stretch Wrap Markets Review series click here. _____________________________________ The PetroChem Wire is a daily newsletter serving the petrochemical industry. It counts every major chemical and refining company among its subscribers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies. Now Available 2010 Ethylene System Wall Maps to NSWA members These are excellent representations of the Gulf Coast petrochemical infrastructure and are an excellent way to deepen understanding of how production disruptions impact the broader markets. For more information contact Mark Quiner at mark@petrochemwire.com. Contact: Mark Quiner, Senior Editor +1 713 331 0464 mark@petrochemwire.com www.petrochemwire.com Copyright 2010 Podcast,Series,,Stretchwrap,Markets,Review podcastinfo@stretchwrap.org no No http://www.stretchwrap.org/pcma/?p=990 http://www.stretchwrap.org/pcma/?p=990#comments Tue, 09 Mar 2010 05:00:15 +0000 Mark Quiner http://www.stretchwrap.org/pcma/?p=990 http://www.stretchwrap.org/pcma/?feed=rss2&p=990 00:01:01 The PetroChem Wire publishes daily forward curves for natural gas liquids, ethylene, and polyethylene prices on page three of the report. If interpreted properly, these ... The PetroChem Wire publishes daily forward curves for natural gas liquids, ethylene, and polyethylene prices on page three of the report. If interpreted properly, these forward curves provide insight into market sentiment and direction. They also have a practical application as buyers and sellers routinely use them to lock in margins into the future. A forward curve represents prices paid on a particular date for delivery at certain point in the future. The prices for each month in the curve typically reflect actual transaction levels on the date of publication. It is not a forecast of where prices will be at a given point in the future. Forward curves represent relationships of prices over time on a particular date. Using a real life example from the curves below ethylene traded at 53.25 cents per pound for delivery in March and at 43.5 cpp for delivery in the second quarter of 2010. This does not mean the parties involved in that transaction think the price will be 43.5 cents in the second quarter. It was simply the market price on that particular date. Noting the shape of the curve is a good way to gauge the strength or weakness of a market. It is a snapshot at a particular time of market sentiment. A contango market refers to an upward sloping curve, where the outer months carry a premium over the prompt months. A backwardated market is a downward sloping curve. In a backwardated market, the outer months are trading at a discount to the prompt months. The ethylene curve below is steeply backwardated: February ethylene was at 54 cents per pound on in the example below and ethylene for delivery in December 2010 was 35.375 cents per pound. See February 2010 Stretchwrap Markets Review for further details. A backwardated market is considered to be bullish as it indicates strong demand in the prompt months as buyers are willing to pay a premium for prompt material. A contango market is a more normal state of affairs. The outer months will carry a premium due to the cost of money and storage. Observers of the ethylene market are currently watching to see if the current backwardation flattens out, indicating the strength may be moderating, or if it widens, indicating more strength. Forward curves have a practical application for locking in pricing. Referring to the example below, a chemical company that manufactures ethylene from ethane can lock in a healthy profit margin by purchasing 2Q ethane at 67.5 cents/gal nbsp;and selling 2Q ethylene at 43.5 cents/lb (ethane at 67.5 cents/gal translates to 22.7 cents/lb - a 45-cent spread to ethylene). Market participants further down the chain all the way to a stretch buyer can employ similar strategies. They can offset price fluctuations by locking in correlated raw material pricing into the future. _____________________________________ The PetroChem Wire is a daily newsletter serving the petrochemical industry. It counts every major chemical and refining company among its subscribers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies. Contact: Mark Quiner, Senior Editor +1 713 331 0464 mark@petrochemwire.com www.petrochemwire.com Copyright 2010 Pricing podcastinfo@stretchwrap.org no No