We continue to see significant volatility in US product prices, and this increases uncertainty around the underlying direction of the markets for the balance of the year. The recent storms have likely created enough production interruptions to take any slack that had been developing in August out of play, and while we see that in the most recent moves for ethylene and propylene – Exhibit below - it is likely more interesting to see what happens with polymer pricing as we move through the balance of September – as this will determine profits for most. While we focus on the high prices in the US more than we do the prices in Europe, it is also worth noting that European polyolefin margins remain very high, with one local producer confirming this week that records continue to be set in terms of cash flows and unit profitability. The frustration for the US producers impacted by the storm is that while their plant closures may be contributing to the tight markets, they do not get the benefit of the higher margins on the impacted facilities. While we would expect many to produce extremely high numbers for 3Q – a handful will likely lament how much they could have made had their plants operated fully. See more in today's daily report.
