From PetroChem Wire . . . .
PetroChem Wire's Daily Wire provides closing prices and a summary of the day's trading activity for US ethylene, proylene, polymers and upstream NGLs markets. Begun in 2007, its olefins and polyolefins prices serve as benchmarks for a number of physical and swap contracts that trade on the CME/NYMEX Clearport system.
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November PE contract prices fall
HOUSTON, December 4, 2018 (PCW) -- North American PE producers have confirmed reducing their November domestic contract prices by 3 cpp, undoing a 3 cpp price increase that was implemented in September.
Buyers believe December may bring additional price reductions, and it is not uncommon for the PE market to end a year with two consecutive decreases. Prices fell by a net 5 cpp in November-December 2016 and a net 7 cpp in November-December 2014.
In the case of late 2016, prices rebounded in the following quarter as PE supply tightened. In the case of late 2014, prices continued to slide straight through February 2015 as the PE market adjusted to the sharp correction for crude oil prices in 2014.
Traders and end-users are uncertain how much further PE prices will drop, in part because the US market is oversupplied with new capacity, especially for LLDPE grades.
At the same time, international demand for PE has weakened, forcing US sellers to lower their export prices in order to move material.
The benchmark HDPE blow molding (BM) grade began November priced for export at 47 cpp railcar FOB Houston and ended November at 42 cpp. Traders expect that price to continue drifting lower in December.
HDPE BM last traded below 40 cpp in February 2016, according to PetroChem Wire data, at a time when NYMEX WTI crude oil prices were bottoming out around $30/bbl. Crude oil prices are approximately $20 higher today, but ethylene prices are similar to back then, around 20 cpp. -- David Barry