Stretchwrap Markets Review - PE Prices Steady Amid Higher Ethylene and Volatile NGL Prices
November 16 to December 15, 2009, Vol. 1, Issue 13
Polyethylene prices were steady from mid-November to mid-December. Upstream, ethylene prices traded higher during this time period, and ethane spot pricing was volatile.
In the polyethylene market, producers were seeking to implement 4-5 cpp contract price increases in November. Several participants said agreements were ultimately reached to keep prices flat in November. The 4-5-cent initiative is now being negotiated for December implementation. The outcome has not been determined.
In the spot market, generic prime resale prices for HDPE blow mold were roughly steady during this time period in the low-to-mid 50s cpp range. LLDPE film butene grade was also steady, trading in the mid-to-high 50s cpp. There continues to be some limited interest in the export market. HDPE blow mold is trading in the high 40s cpp range on an FOB Houston basis. LLDPE film butene grade is trading in the low 50s cpp.
In production news, Formosa put a 100% sales control on polyethylene sales in December following a plant-wide power outage on December 4. Upstream, outages at steam crackers, the units where ethylene monomer is produced, took center stage in the past two weeks. The Gulf coast steam cracker operating rate based on outages alone dipped to about 88% in December, compared with 97% in mid-November. This figure does not represent actual operating rates but is intended to quantify the impact of a complete plant shutdown on the market.
Ethylene monomer was higher overall during this time period. In mid-November, spot prices were at 33 cpp, and rose to 36.25 cpp by December 8. However, prices subsequently eased to 35.375 cpp by December 15.
Slightly weaker ethylene monomer prices in the past week came as ethane, a raw material to produce ethylene, fell in December. Ethane spot prices fell 17% from November 30 to December 15 to the high 60s cpp range. This came on the heels of a 15% rise in prices from the middle to the end of November.
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