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Highlights
Spot PP prices gain a penny, Export PE a half
Both Ethylene (+$.005/lb) and PGP (+$.0225/lb) gain.
Natural Gas up 57% in 2 days
Tensions ease over Greenland and additional tariffs as Trump attends World Economic Forum
Resin Markets
Spot resin trading was firmer again today, customers are jumping in and buying some pounds just to protect themselves from any major spikes that could happen if Winter Storm Fern becomes a major production disrupting issue. This is not a runaway market though and it usually is not until a major event occurs so I don’t expect things to get out of hand unless this proves to truly be something.
Still input costs are lifting and our Resindex PP prices gained a penny today on higher PGP prices for both the domestic and export market. Natural Gas will also keep some pressure on NGLs having risen 57% in just 2 days. Our Export Resindex PE prices lifted $11/MT today for all grades aside from LLDPE Injection. Our domestic PE prices remained unchanged today but are still up $.015/lb for the year so far. As things step higher my likelihood of a contract price increase happening have gone up. PP will certainly raise $.02/lb or more as PGP contracts will be increased.
Monomer Market
Monomers pressed higher today and PGP jumped 7.5% rising to $.3225/lb for January, the highest price since September 19th. At $.3225/lb we're just below the straight-line average PGP price of the past year of $.33/lb.
Ethylene also was higher selling at $.185/lb in Louisiana but being bid up to $.19125/lb for Texas delivery. February was done at $.195/lb then $.20/lb while second quarter was completed at $.20625/lb.
Winter Storm Fern
As the threat of Winter Storm Fern is sweeping the nation Natural Gas prices have popped 57% in just 2 days closing today at $4.875/mmBtu for the front month. When looking at March Nat Gas however you can see this is looked at as a short term spike, the chart below highlights the difference, you can see that large spike in the spread with the furthest bar to the right. Still upward pressure will be put on NGLs in the meantime.
Our team that are located in Houston spent some time wrapping pipes with insulation to avoid any problems and were preparing for potential power outages. Resin reactors are not full weather proofed for such cold and if widespread power is lost like it was in February 2021 with Winter Storm Uri prices will absolutely spike.
What’s getting a little less attention is the logistics issues we will see. Typically ice and snow in Houston makes traveling to work difficult and many warehouses will close since their employees cannot safely travel to the office. We’ll see rates shoot up out of Houston and likely some railcar shipment delays even if production is not affected. For now, rates haven’t really risen yet as the storm is mostly going to effect Houston on the weekend.
US Economic Data
We got Pending Home Sales released today and it’s a sharp turnaround from November with December reported at -9.3% month over month and year over year showed -3%. Home sales should start getting a bit of a push from mortgage rates which have dropped again to a national average of 6.16%.
Global Trade/Greenland
The TACO trade seems to be back in full effect on European tariffs over Greenland, what is the TACO trade? T - Trump A- Always C-Chickens O-Out, a certain threat or policy is quickly dropped after markets react poorly. Today marked a quick turnaround on President Trump's tariff threats that he issued in relation to taking control of Greenland. While attending the World Economic Forum in Switzerland with other world leaders he announced he would not implement additional tariffs against the 8 nations he deemed were standing in his way of acquiring Greenland. He also stated that he would not use force in the Artic but did announce a framework is in place on Arctic security with NATO.
Lots happening this week, stick with us and we'll keep you up to date. For those of you new to Resintel, these daily reports are available with a Silver Subscription. The charts were made using our fully customizable dashboards, which is available with our Gold plan. For more information please contact us at sales@resintel.com.
-Dominick Russo, CFA
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