Polypropylene Prices (Q1 2022)
Middle East & Africa
Higher energy costs resulting from the Ukrainian/Russian conflict, as well as the possibility of declining supply in an already oversupplied market, are driving resin suppliers in Africa to demand price rises. Despite price rises in most PP and PE grades in March, underlying demand remained poor across the markets. New offers in Nigeria climbed by 10-80 USD/MT in March owing to growing cost pressure. Despite the fact that Nigerian players continued to report supply delays, overall market availability was adequate, balanced by current demand conditions.
A supply overhang is anticipated in the US polypropylene (PP) market in 2022 as a result of an increase in imports, a decrease in demand, difficult export logistics, and improved output.
Polypropylene Prices (Q4 2021)
After a good start in October, the North-East Asian polypropylene market suffered a decline in demand during Q4 of FY21. Spot prices struck a turning point in the first week of November and have since begun to decrease. Between Q3 and Q4, the average price of raffia, injection, and random copolymer decreased by 3%. Imports into China had dwindled at the tail end of Q4 as the Chinese government implemented severe COVID controls, jamming major container terminals such as Ningbo. Although production and supply had been constrained in the new year, prices were likely to fall towards the end of January in advance of the lunar new year vacations. However, the long-term picture for Q1 FY22 appears optimistic. Indian prices followed a similar trend to those in Asia, reaching an inflection point in the second week of November. The downward trend in spot prices remained until the end of Q4 and is likely to continue into Q1 of FY22, as continuing congestion at major ports in Northeast Asia implies that total demand may continue to decline, forcing surplus output to be channelled into the domestic market. By the mid-to-third week of November FY21, import prices for Raffia MFI3 from the Middle East had also lowered.
In Q4 of FY21, the European market posted marginal increases over the previous quarter, as the average price for PP copolymer grew by 2% on an FD Hamburg basis. The propylene to polypropylene pricing differential worsened in Q4 due to a greater arbitrage margin for imports from the Middle East against regional suppliers, resulting in a propylene excess in the European market. The increase in energy costs beginning in the first week of December had little effect on polymer prices, as demand fell ahead of the European holiday season, offsetting any upward pressure on pricing.
The forecast for Q1 FY22 remains uncertain, as volatility in the polymer market was unusually high in the new year, owing to the advent of a new pandemic that disrupted global supply chains, disrupting market signals. Domestic demand is likely to be the primary driver of growth in the coming quarter, while international demand is expected to revive by the end of February ‘22.
The market in North America experienced a decline in total demand in the third quarter of FY21, compared to Q3 of FY21. By the closing weeks of December, the propylene to polypropylene spread had narrowed dramatically, erasing any meaningful gain in margins collected by manufacturers and distributors during the months of September and October as a result of historically high freight rates during that period. The second half of Q4 showed a fall in polymer demand, which is a common occurrence leading up to the holiday season. Prices are projected to rebound during the early to mid-February period, when North America and Europe normally experience value chain disruption owing to rising energy prices and the Texas cold wave.
The Brazilian government voted in November 2021 to lower import duties on polyethylene and polypropylene to 12.6% from 14%, effective from November 11 through December 2022. This was a precautionary approach to give the covid-infested business a head start. As a result, prices in the Brazilian markets have dropped.
Polypropylene Prices (Q1-Q3 2021)
During the first quarter of 2021, the northeast Asian region's supply remained balanced. Four new facilities in China and the restart of major important plants in South Korea increased regional supplies. However, the southeast Asian region faced supply constraints due to a lack of foreign imports. In India, demand increased due to increased consumption in the downstream market for surgical mask manufacturing, followed by persistent demand for BOPP films in the packaging sector. The upward trend was accelerated further by high crude oil prices, which exceeded USD 60 per barrel in March. In the Indian market, the CFR price of Raffia grade averaged roughly 1633 USD/MT in Q1. The introduction of additional COVID-19 variations in numerous parts of Asia, on the other hand, reinforced the downstream converters' concerns.
Supply in the Asia Pacific region increased significantly during the second quarter of 2021, with the industry reporting regular operations and increased pressure on the major feedstock propylene due to China's rising commodity inflation rate. May Day holidays and a power constraint in Guangdong province, South China, further constrained market supplies. India's deadly COVID second wave had a catastrophic effect on industrial and commercial activities for the majority of Q2, prompting the country to announce a much-needed relief in its PP resin offerings. The resurgence of COVID infections and weaker offtake from southeast Asian markets dampened demand prospects, causing ripples in the prices across Asia Pacific. In June, the FOB Qingdao pricing negotiation for PP raffia grade was resolved at 1263 USD/MT.
In Q3 2021, the forecast for the polypropylene market was positive, owing to strong demand and limited supply in the Asia Pacific area. Consistent increases in the price were accompanied by a surge in the price of a critical feedstock, propylene. Additionally, unexpected plant outages in the region contributed to the product's scarcity, which supported the pricing trend. In India, PP fundamentals gained traction because of a global supply shortfall caused by constrained availability of the upstream propylene. In September, ex-Silvassa prices ended at 1555 USD/MT.
PP supplies remained constrained in the first quarter of 2021, as a result of the tight availability of feedstock propylene caused by the ongoing pandemic and lockdown limitations whereas robust demand for PP in the downstream packaging and automotive industries boosted demand in the European region. The combination of limited supply and increased demand resulted in a triple-digit increase in the prices in Europe.
At the start of Q2, the European market was experiencing a severe polymer shortage, affecting countless small and medium-sized enterprises (SME) and almost 90% of European converters. As a result, PP supplies remained rather scarce during the second quarter of 2021. Although the import situation improved from the US, the fewer and more expensive import cargoes were insufficient to meet domestic demand. Numerous buyers turned to Chinese vendors to plug supply shortfalls. For July delivery, the price of raffia grades concluded at 1914 USD/MT.
During the third quarter of 2021, the Polypropylene market in Europe saw a decreasing trend, owing to the product's abundant supply in the face of diminished demand. In the European region, increased import rates and increased production rates resulted in ample supplies of PP, which resulted in a reduction in its pricing. Additionally, by the third quarter, as a result of the region's energy crisis, numerous downstream manufacturers were forced to lower operating rates, resulting in slowed market activity. Thus, prices fell to 2270 USD/MT from 2492 USD/MT in the July-September period.
In the first quarter of 2021, PP supply became constrained as numerous US producers squeezed margins for downstream converters as a result of increased demand and limited stock availability across the area. Freezing temperatures forced the shutdown of numerous petrochemical and polymer manufacturing plants, including those of multinational conglomerates such as LyondellBasell and INEOS olefins & polymers. Due to the prolonged shortfall, PP prices more than doubled in February, pushing some customers to seek imports from Asian markets. Between January and March, rates of PP Injection Moulding grade increased by approximately 40%. In the final week of March, the FOB Louisiana (USA) PP IM grade price exceeded 2400 USD/MT.
During the second quarter of 2021, the industrial infrastructure recovered from the devastation caused by winter storm Uri, and all production units resumed operations at increased rates. As a result of the ripple effect, PP supply in the North American market increased significantly in comparison to the previous quarter, but some tightness was observed in April. Numerous US polymer producers announced price increases in response to persistent raw material scarcity. In May, Formosa Plastics increased the price of PP resin in all grades by USD 110 per tonne. Demand was boosted by a recovery in the manufacturing sector and an increase in the demand for consumer durable goods. In June, the FOB Texas price for Polypropylene Homopolymer injection moulding grade was agreed upon at 2995 USD/MT.
A spike in prices was noticed during the third quarter of 2021, owing to constrained upstream propylene availability. Propylene supply remained scarce in the US market, as numerous manufacturers were forced to shut down production facilities as a result of the Ida hurricane that ravaged the Gulf Coast in August.
In January 2021, the polymer faced the most substantial price increases, because of tight supply, with prices rising on average by 63pc year on year in December in Brazilian reals. Supply tightness in Brazilian resin markets had pushed prices to unprecedented levels. The higher prices were also the result of increased demand for plastics for use in food packaging for take-out and delivery during pandemic-related lockdowns. The prices were expected to continue for the next five months. However, this trend discontinued when the government of Brazil took a swift decision to temporarily end import duty imposed on PP for 3 months. The government capped the imports of PP homopolymer at 77,000 MT for 3 months.
Polypropylene Prices Overview 2020
Asian Polypropylene's (PP) third-quarter results were muted, despite the economy's steady recovery in the third quarter. Fears of a second Covid-19 wave prolonged semi-lockdowns in various countries in southeast Asia and India, impeding the recovery in demand for completed plastic products. Polymer prices remained subdued in mid-August due to weak fundamentals but recovered in the first week of September as supply tightened due to reduced US-origin PP supplies to Asia, bolstered by healthy demand in China.
Demand for PP appeared to grow in Q3 2020, with demand steadily improving in Europe towards the end of the year, becoming significantly stronger than in Asia. The market outlook was further bolstered by resilient demand from the automotive and medical sectors. Total declaration of force majeure on the PP plant in early August had a little adverse effect on the market, since other producers reported lower stockpiles and buying activity appeared to be returning to pre-pandemic levels in the coming quarter.
North America remained deafeningly silent in terms of major moves, while several US manufacturers stayed closed and production losses worsened. Lyondell Basell and INEOS, two key players, declared force majeure on PP production throughout the quarter, opting for precautionary shutdowns ahead of storm Laura, limiting the product's global availability. Prices increased significantly throughout the quarter despite little export activity, with further rises projected in the next two months.
From January to August, Brazil's PP imports were 145,324 MT, a decrease of 10.6% year over year. In the fourth quarter of 2020, prices grew 5.8% compared to January's values, which were valued at 1,090 USD/MT, but increased by 28.2% compared to May, the lowest point of the year. It was at its highest level since October of last year.
Procurement Resource provides latest prices of Polypropylene (PP) each price database is tied to a user-friendly graphing tool dating back to 2014, which provides a range of functionalities: configuration of price series over user defined time period; comparison of product movements across countries; customisation of price currencies and unit; extraction of price data as excel files to be used offline.
Procurement Resource provides prices of Polypropylene for several regions around the globe, which are as follows:
About Polypropylene (PP):
Polypropylene or PP is basically a thermoplastic polymer that is utilised in a wide variety of applications. It is prepared via chain-growth polymerisation from the monomer propylene. Polypropylene belongs to the group of polyolefins and is partially crystalline as well as non-polar. Its characteristics are similar to that of polyethylene, but it is slightly harder and more heat resistant.
In the gas phase polymerisation process, propene is passed over heterogeneous catalyst particles to finally produce polymer in a powdered form, which is further transformend into pellets.
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The displayed pricing data is derived through weighted average purchase price, including contract and spot transactions at the specified locations unless otherwise stated. The information provided comes from the compilation and processing of commercial data officially reported for each nation (i.e. government agencies, external trade bodies, and industry publications).