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Highlights
Solid PE trading activity continues
Exxon Issues Price Increase Letter
Ethylene continues higher
Russia rejects peace deal
Resin Markets
Spot resin trading continued to clip along today with a noticeable uptick in requests and opportunities. LLDPE and LDPE Film remained the most transacted materials through our trading desk, while Polypropylene was difficult to close the gap between bid and offers.
The theme of the past couple of days has been end of year positioning and price with some buyers looking for extra cars to be shipped in January if it would sweetin’ the deal. It’s typical for prices to rise to begin the year in January and savvy buyers are willing to fill their coffers at these December levels. The industry is not usually in such a slump as it has been but many believe a January uptick is still in the cards and I agree, but I do think the increase level will not be as substantial as previous years.
On that note Exxon issued a price increase letter today moving its $.05/lb increase from November to December and tacking on another nickel for January. It’d be pretty a tough sell at this point to see an increase be pushed through in December without a lot of upward momentum from the spot market to get the job done but we have seen the lower end of the market clean up and asking prices move up a touch for prime offers.
On the contrary it wouldn’t be shocking to see a non-market adjustment for PE to reset the popular indices to more closely reflect where prices sit today. By our count contracts remain up a nickel for the year which first went in last January, we saw some contract price fluctuation in the Spring but steady since. For reference our spot PE Resindex prices are down $.005-.03/lb for the year.
Monomer Markets
Spot Ethylene continued its upward trek today with December trading at $.1825/lb, up another half cent. January was sold at $.19375/lb and first quarter 2026 was completed at $.20/lb. Further showing off the forward curve 2Q 2026 came together at $.21/lb. PGP has not been as active with December being marked at $.255/lb today.
Natural Gas broke the $5/mmBtu level today during the session rising up to $5.039/mmBtu before settling back to close the day at $4.995/mmBtu. The very cold weather forecast this Winter has given NG plenty of strength. Ethane has followed solidly above $.12/lb when converted from gallons. Crude remains sub $60/bbl at $58.95/bbl.
Ukraine Russia War
President Trump’s envoy to Russia was unsuccessful in securing a peace deal between Russia and Ukraine. Putin called the talks useful but said there would be no compromise in his mission. When President Trump issued his 28 point peace plan last week many said it was very slanted towards Russia but we can see that was not so. For now, this war rages on.
US Economic Data
We got the ADP employment report for November and it showed a loss of 32,000 jobs in the private sector. A very large decrease versus the expected addition of 10-40,000 jobs and October’s gain of 47,000 jobs. This is the largest drop since March of 2023. If you dive into the numbers small businesses cut 120,000 jobs while medium sized added 51k and large added 39k. Manufacturing unfortunately lost 18000 jobs in the private sector last month. The stage is set for the Fed to cut rates another quarter point at their meeting next week. The target range sits at 3.75-4%.
Industrial Production managed a modest uptick in September for a .1% change month over month while year over year we saw a 1.6% gain. Manufacturing production showed no gain at all month over month but year on year saw a 1.5% increase which actually was pretty strong. The broader manufacturing complex is still idling though and while pockets of the industrial economy are stabilizing, like durable goods, transportation, and electronics we’re still far from rebuilding serious demand here in the US with nondurables, chemicals, and automobiles all struggling.
The Capacity Utilization print was so so coming in at 75.9% for September but missed the expected 77.3%. The statistic measures just what you think it might, the rate at which industry produces versus its potential. Manufacturing came in at 75.53%.
Logistics
Packaging warehouses around the country have been sending out their rate increase letters for 2026 and it's a really difficult time to add additional packaging and storage costs for the industry. With lower prices there is less room in the chain for added costs and downward moving prices have left some inventory, bought not long ago, at negative margins.
This has been a trend over the past couple of years of quickly escalating costs and it’s my opinion it has led to resellers holding less inventory, the carrying costs are getting too high and with not much upward price movement of late the potential margin from your inventory investment gets wiped away pretty quickly with high storage. This certainly affects resin demand as resellers often come in and buy large slugs to keep ready to ship resin on hand for smaller clients. Taking it one step further, ready to go shipments for smaller buyers carry a larger premium over railcar pricing.
Last year at this time we started to see packaging lines fill up and railcars overflowing storage yards in Houston. I haven’t observed or experienced any abnormal delays yet but we’re getting through a heavy buying period and things really got bad in January and February. Let's hope we do not see a repeat but if your provider but you can consult our warehouse map for options.
Have a great evening everyone, we’ll see you tomorrow!
-Dominick Russo, CFA
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