Propylene monomer is trading over 90 cents. Ethylene monomer is trading at 65 cents. Ethane is in the high 80 cents per gallon. Crude oil is over $100. Gasoline futures are over $3.
Polypropylene is offered over $1. Polyethylene is trading, in cents per pound, in the upper 60s to low 70s, depending on grade. Between the time of my writing and your reading these words, these prices will be out of date.
There is panic in the streets, particularly with PP. How can processors manage price risk?
Prices have not suddenly become volatile, but market behavior has changed. Ethylene now behaves as a true commodity. People are speculating on price movements and putting money into trades based on their opinions. The result is that we have more-frequent price discovery, and prices more frequently attached to changing supply-and-demand perceptions. Propylene has not quite gotten to this point, but I believe it will soon.
I contend speculation is a good thing for plastics processors. Speculation inspires inventory building, and subsequent selling when prices get high. It smoothes out peaks and valleys in prices. It also means producers and consumers do not have to bear the burden of carrying inventory.
Another benefit is, pricing information is readily available. Those who want to know yesterday's prices can easily find them. This leads to more educated decision making regarding resin inventory. Deals are trading in the future, with forward markets. Processors and end users can watch for opportune times to match fixed resin prices to fixed finished-goods prices. It's not without risk, but it is a powerful new way to mitigate risk.