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Volume: Good Price: LowerThe Polyethylene market came under pressure this past week with spot prices easing about $.01/lb. The market has now fully given back the premium that it had earned in the first part of the month when producers were trying to enact their $.04/lb price increase in August. With softer export demand alongside lower energy futures and spot feedstock costs, resin market players are now putting into question the likelihood of the $.09/lb of increases in play for September.Very strong export demand has been the key to the Polyethylene market's strength these past few months. It has allowed producers to more than offset relatively poor domestic demand and limit their resin inventories, even amid very high operating rates. These conditions have facilitated higher domestic resin prices through a series of successfully implemented price increases. We have however, seen export sales struggle as of recent.Strong overall (domestic and export) Polyethylene demand had pulled on Ethylene supplies, leaving them short and have driven this monomer price higher. In fact, demand for Ethylene has been so good that makers of the monomer have maximized throughput from cheap Natural Gas feeds and have turned to much more expensive crude oil for extra supply. So, while Natural Gas had fallen some 20% this week, it is important to remember that for months, incremental Ethylene has been priced off of Crude Oil.Ethylene has found some relief in the spot market, but contract prices forged another penny higher in August. Since spot Ethylene traded on average steady to lower, the $.01/lb gain could be considered a margin grab at the expense of Polyethylene producers. There was however, some room to give, since in July resin contracts were up on average $.05/lb, while monomer contracts only gained $.025/lb.Export sales have been lower during these past couple of weeks, evidenced by slack international trading activity here at The Plastics Exchange. European traders, many of which were on holiday, have lowered their target buy prices by about $.03/lb. Quite to the contrary, during the first half of August, North American Polyethylene producers raised export asking prices, which created a disconnect and hampered traders abilities to transact.Producers finally began lowering export prices last week, but it was not necessarily enough to open the spigot wide enough for trade to flow freely. We expect to see prices ease further, chasing the export bid. Without the export market there to soak up Polyethylene supplies, the domestic market might have some difficulty continuing higher in September. While there is definitely a chance that producers can still implement some of their price increases, barring a catastrophic supply event, it will not be the entire $.09/lb and might not end up being much or even anything at all.. I am an expert from chinamachinemanufacturer.com, while we provides the quality product, such as China Roll Forming Machinery , Wire and Cable Machinery, Winding Machines,and more.
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