Global Polypropylene Price Trends: Decline in US, Increase in Europe, Stability in Asia
Global Polypropylene Price Trends: Decline in US, Increase in Europe, Stability in Asia

Global Polypropylene Price Trends: Decline in US, Increase in Europe, Stability in Asia

  • 28-Mar-2024 3:05 PM
  • Journalist: Emilia Jackson

Texas (USA): In the US market for the week ending on March 22, 2024, there was a notable 4.3% decline in the price of Polypropylene (PP), primarily driven by subdued demand from domestic consumers. Despite this decrease in PP price, the price of its feedstock, Propylene, maintained a stable trajectory during the same period. Additionally, there was a significant decrease in freight rates across both East/West coast routes to Asia and Europe, indicating a broader trend of declining transportation costs. These market conditions reflect an oversupply situation, with more carriers available than there is demand for their services, contributing to a robust supply chain environment. However, despite stable product availability within the country, lacklustre demand for PP dynamics have led to a prevailing bearish trend in the market.

Conversely, the European market experienced a notable uptick in the price of PP, with an increase of approximately USD 20/MT. This surge can be attributed to a parallel rise in the price of upstream Crude Oil, which saw a 3% increase during the same period. The escalation in crude oil prices marked a significant milestone, reaching their highest point in five months, driven by mounting concerns over supply disruptions amidst escalating geopolitical tensions. Additionally, Russia's proposition for further output cuts to bolster energy prices contributed to the upward trajectory. Despite intermittent fluctuations, energy prices have largely remained subdued since September 2022, supported by sluggish global demand and efforts to reduce carbon emissions.

Looking ahead, fundamental indicators surrounding crude oil markets appear robust, with analysts anticipating a continuation of existing production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+). The upcoming review meeting scheduled for next week is expected to see discussions on extending these production cuts beyond the scheduled date of June 2024.

Meanwhile, in the Chinese PP market, despite several plant shutdowns, the price of PP has remained stable throughout the week. Encouraging trends have been observed in the international crude oil market recently, contributing to the recovery of oil-based PP costs. Fluctuations and increases in feedstock propylene are being propelled by crude oil, while propane rates are generally stabilizing. Although the methanol market is exhibiting relative stability, market prices have dipped due to weakened demand, somewhat loosening the support for PP within the market.

According to ChemAnalyst, the upcoming week may witness a notable increase in the price of PP, driven by anticipated heightened demand. This surge in demand is often observed during spring, particularly within the downstream automobile sector. As the weather begins to improve and temperatures rise, consumers typically feel more inclined to explore new opportunities, including the purchase of new vehicles. Additionally, spring symbolizes renewal and fresh starts, prompting many consumers to contemplate upgrading their vehicles or purchasing new models. Capitalizing on this trend, dealerships typically roll out attractive deals and promotions during the spring months to entice consumers, further stimulating the demand for PP. In summary, the combination of improved weather, financial incentives, and the spirit of renewal commonly results in a surge in automobile as well as PP demand during the spring season.

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