US spot ethylene and propylene markets have posted large declines over the past two weeks on easing supply levels and poor buying interest, as per Chemorbis. Monthly contract prices for both monomers have also recently been settled with steep month over month decreases. As the US is a major exporter of both PP and PE, declining monomer prices in the country suggest that American PP and PE sellers will be able to compete more effectively in their traditional export markets, especially as the current economic uncertainties have led many buyers to source their minimal needs from the most cost effective sources.
In the ethylene market, recent done deals for June in the spot market were reported US$33-111/ton lower when compared with done deal levels in the last week of May, with some spot deals for July being reported at even lower prices. These done deal levels represent the lowest reported prices for spot ethylene in the US market for the past 32 weeks, with sources attributing the decline in price to loosening supplies. US ethylene contract for May was settled with a US$171/ton decrease from April. Theoretical production costs based on the recently reported done deals in the spot market suggest that US PE sellers can aggressively enter a number of global export markets, as their theoretical PE production costs are currently substantially lower than those of their Asian and European rivals.
Rapid declines have also been witnessed in the US propylene market over the past two weeks. June contracts for polymer grade propylene were settled last week with decreases of US$176/ton from the May contract levels, bringing the cumulative price decreases in polymer grade propylene contract prices over the past two months to US$441/ton as the May contract had been settled with a $264/ton decrease from April. In the spot market, offers for polymer grade propylene were notionally steady over the past week after posting steep declines of US$220-225/ton during the prior week. The last reported spot deal for polymer grade propylene, concluded in late May for July delivery, was done at a price US$85-90/ton below the current notional level. Lower propylene prices are expected to enhance the competitiveness of US exporters, who predict that they will be able to attract more business in Asian, African and Mediterranean markets following this reduction in the asking prices necessary to meet their theoretical break even point.