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Information in this section is supplied courtesy of www.ThePlasticsExchange.com, a company based in Chicago that operates an online spot market and provides market intelligence on commodity plastic resins. Prices are in U.S. funds. ThePlasticsExchange.com Market Update 5/5/2008
Polyethylene Volume: Light Price: Rising
Spot Polyethylene prices added $.01/lb late last week as producers began posturing to secure the second half of their $.06/lb increase in May. Supplies around month-end were sparse, with some of the lowest spot availabilities seen this year. Light domestic offers then began to show mostly marked $.03/lb higher. Export offers then appeared more prevalently and at prices mostly $.01-.02/lb higher.
Spot LLDPE Butene - Spot Ethylene - Spread 1 Year	Polyethylene 1 Year
After getting squeezed during Q1’08, spot Polyethylene margins have returned to a more typical level, helped along by easing monomer costs and higher resin prices. Then with the April $.03/lb Polyethylene price increase finally secured, spot Ethylene prices again began to perk up, adding $.0275/lb last week, most recently trading at $.545/lb, but still $.04/lb lower than earlier highs. The period of tighter margins coupled with still strong exports, helped Polyethylene producers regain pricing power and finally implement a price increase in 2008. Processors still claim poor demand, but did show good spot buying as the price increase became imminent. Going forward, it will be interesting to see if the export market will continue to provide the insatiable appetite capable of sustaining high producer operating rates amidst questionable domestic demand. While at times it has waned, the export market in general has been so strong that it has become difficult to simply secure packaging time at the Houston warehouses. The US dollar, which had fallen to perpetually new lows against the Euro, has finally staged it first meaningful rally. Although the overall exchange rate remains near historic lows, the dollar gained nearly $.02/Euro last week back to $1.5386/Euro, well off record lows near $1.60/Euro. European spot resin demand has also softened, and with vast quantities of new Polyethylene production scheduled to coming onstream later this year and in the future, exports might have already seen its brightest days. In the meantime, export sales to Europe and to buyers south of the USA will continue to flow, but the pace should be watched, as exports comprise a significant portion of total North American sales. With just the $.03/lb out there, it is a little surprising that another price increase has not yet been nominated for June – if even just for support. For now, Generic Prime offers are up $.03/lb in May, we will see how the market develops.
Polypropylene Volume: Light Price: Rising
The Polypropylene market coasted into month-end on Wednesday, and then added $.01/lb the first two days of May. Offerings were light but began to improve with higher prices. Spot prices were strong in April, increasing $.04/lb. April PGP contracts settled early $.035/lb higher, and while producers have pushed these increased costs downstream, there is still margin to make up from March.
Spot HoPP - Spot RGP - Spread 1 Year	Polypropylene 1 Year
Spot RGP prices rallied $.11/lb since the beginning of March, during this time, spot resin prices only increased about $.07-.08/lb, squeezing margins as illustrated by the green chart, Do note that the chart is for Spot PP Homo minus spot RGP; PGP, which is used by PP producers as the feedstock, runs around a $.04/lb premium. Even though margins have recently begun to improve somewhat due to higher resin prices, spot PP margins are currently undesirable. The lack of Propylene monomer is to blame, and this is partially caused by Ethylene. While margins for making Ethylene from Ethane are currently excellent, economics for Ethylene production is poor when cracking heavy feedstocks. In response, operating rates have been reduced by these Ethylene producers with unfavorable feedstocks, and consequently less Propylene is made as a by-products of the process. Limited supplies have translated to higher monomer costs, which have been difficult to fully pass downstream, partially because processor demand is suffering. Although there was good spot demand towards the end of April, since Polypropylene producers nominated a $.05/lb increase for May contracts, this might have been reflective of pre-buying activity. RGP prices have continued to rally into May, so at least a one Polypropylene produces has now revised the increase upwards to $.07/lb. Profitable export sales are limited given that higher monomer costs have priced US resin out of most of the international resin markets. Some contracted exports and sales to Mexico and South America could still flow, but exports cannot currently be counted on to add good alternative demand as market support. Domestic Polypropylene prices appear to be going still higher in May. It is too early tell how much of the $.05-.07/lb increases will stick. Propylene monomer prices and availability will continue to be a strong influencing factor. Domestic demand also needs to be watched and perhaps we will see some aggressively priced exports resin.
Polystyrene Volume: Light Price: Rising
After rallying about $.02/lb during April, spot Polystyrene prices were steady into month-end, and quickly added another penny in very early May. Although the current $.03/lb price increase might not have been fully implemented throughout the industry during April, current spot levels indicate good support for widespread acceptance, perhaps only out on the timing for some.
Polystyrene 30 Day	Polystyrene 1 Year
To help drive home the $.03/lb increase and protect against the potential for higher costs, a new price increase was nominated for May implementation, with producers seeking as much as $.04/lb for GPPS and $.06/lb for HIPS. The market firmed around the time of the new announcement; spot Polystyrene supplies became very limited, providing processors with few alternatives to contract purchases. Railcars of good offgrade Polystyrene are now selling in the $.80s/lb. Some offcolor and transitional resin has been around at nicely discounted prices. Spot Benzene prices have begun to creep higher, adding about $.05/gal to end the week at $3.91 - 3.92/gal. Prices are forecasted to move slightly higher as Benzene for June delivery is trading at a slight premium.
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