Weekly Market Drivers for the USA
According to Resin Technology Incorporated’s (RTI) weekly market driver report for plastics processors, the global resin markets will be put on hold for two weeks until the post Chinese New Years’ demand and oil price direction is determined.
The ACC inventory and export data for December is still not available. Based on January’s good availability and strong exports, a December inventory gain or draw appeared to impact on the resin markets.
Crude Oil/Naphtha: Oil prices ranged from $29-$34/bbl this week. OPECs decision to meet and the rumors regarding the meeting have kept oil prices active all week.
Naphtha is tracking with oil near $320/mt.
Ethane: Steady pricing coupled with low natural gas prices should continue. Cash cost to make ethylene from ethane is below $0.08/lb.
Ethylene: Excess supply prior to a maintenance season is not consistent with past years. Ethylene supplies continue to remain healthy with pricing stable neat $18/lb.
RTi PE Outlook and Suggested Action Strategies
30 Days: Manage inventories with expectations of downward price pressure in February. March pricing will be a more visible as the February price is set. February price decrease may set the PE price floor.
60/90 Days: Global demand and the price of oil will continue to be a leading price indicator. There are no drivers present that suggest any price increase potential. With $30 oil and February price reductions may stabilize the market heading into March and April.
In the PP market, January off to a slow start.
Dow’s PDH unit is running. Reports indicate that the unit is running close to rates.
Refinery Rates: US rates were down from 87.4% to 86.6%. PADD3 was down from 83.5% to 83.1%.
Planned and unplanned outages keeping rates low.
Propylene Inventory: Decreased from 3.27 million barrels to 3.198.
PGP: Spot PGP is bid at $0.27/lb with little in the way of transactions.
RGP: Spot RGP trades at $0.1725/lb.
RTi PP Outlook and Suggested Action Strategies
30 Days: February PGP will likely settle lower based on current spot numbers. The implied contract price for February would $0.29/lb based on current spot values. 60/90 Days: Propylene monomer is feeling bearish and could continue to move lower. Polypropylene will face margin expansion attempts in February, but market dynamics could make further success difficult if demand struggles.
In the PVC market, the ethylene contract for January fell $0.01/lb as spot fell $0.0075/lb this week and low export pricing frustrated PVC increase nominations.
Supply & Demand
Supply: Excellent with all producers running. Maintenance is scheduled for late Q1 early Q3 up and down the supply chain, with added PVC capacity starting to show in Q2.
Demand: Housing starts and new home sales ended the year on a positive note, although GDP growth in Q4 slowed to 0.7%, putting 2015 at a 2.4% rate.
Chlorine: Spot pricing started to make some slight downward moves this week.
Ethylene: Excess supply prior to a maintenance season is not consistent with past years. Ethylene supplies continue to remain healthy with pricing stable neat $0.18/lb.
RTi PVC Outlook and Suggested Action Strategies
30 Days: Pricing discussions should focus on continued low ethylene and export pricing as producers will counter with upcoming maintenance outages. Supplies are strong & demand seasonally weak. Flat to slightly down market. 60/90 Days: Stocking in advance of outages could generate upward price pressure depending on the timing of the uptick in construction demand. PVC output should improve over 2015 along with added capacity.
January contracts for PET and feeds settle lower; prices could be approaching a price floor.
A quiet market prevented spot pricing from making any moves this week. Feedstock margins are diminishing with the drops in crude oil, so it is unlikely that prices can go any lower.
The US Department of Commerce’s final decision on the antidumping duties is said to arrive by the end of the month. Imports have shifted focus over to mainly Taiwan and South Korea as a result of the earlier decisions.
Paraxylene: The MX-PX production economics have been near an unfavorable range, whereas toluene based production has recently moved into a more economical range, mainly due to weakened spreads.
PTA: The contract price for PTA is formula driven, based on the PX settlement, which settled $0.02/lb lower. As a result, PTA moved $0.0172/lb lower. Demand was deemed stable this week.
MEG: Ethylene supply tightness in Asia pushed prices upwards. Many facilities are running at reduced rates due to limited feeds.
RTi PET Outlook and Suggested Action Strategies
30 Days: Enjoy the lowest pricing that PET can currently get in this <$35 per barrel crude oil market. Feeds point to a slow and steady incline from here, for pricing can go nowhere but up. 60/90 Days: Steady increases are likely for the rest of Q1 and into April, but that doesn’t mean prices are high. With the approaching turnaround season, and how crude oil has been behaving lately, we could see some larger upward movements later into Q2 as the weakened supplies begin to affect pricing. It is still important to keep an eye on crude oil as well as the Asian market to help determine price directions.
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