US Polypropylene Still on Rise, Formosa Plastics Announces Another Hike in Offered Prices

The freeze fallout in mid-February caused US’ petrochemicals production including Polypropylene (PP) to a total halt. As production rates ramp up at the start of Q1, restoration in supply chains can be seen. However, improved supply has translated a minor affect upon the pricing, which is still bullish for Polypropylene, thereby maintaining its upper edge over other polymer products.

Formosa Plastics USA has announced an increase of USD 110 per MT in Polypropylene prices. The revision in prices will come in effect from 1st May. The company also stated that the delivery for all its PP products will be subjected to its ability to normally operate its production facilities.

Resolutely high prices have made market participants reluctant to export to the traditional markets like Latin America as they face competitive pricing from the global sellers. Hence, US Polypropylene (PP) export volumes are expected to trend lower in the coming weeks amid improved production and seemingly better stock availability. Polypropylene homopolymer injection grade was last assessed on 26th April, at USD 2249-2271 per MT FAS Houston.

This price increase by Formosa Plastics may further hinder the company’s trades as the trend seems contrary to several downstream buyers who had been expecting a dip in the Polypropylene prices in the month of May sensing restoration in supplies.

As per ChemAnalyst, “Polypropylene production levels are expected to return to normal levels towards the end of Q2. Despite the return to normal production levels, market participants should not expect dip in price before Q3. Meanwhile, traders seem divided as buyers are showing reluctance to the high-priced stocks, fearing decreased margins and stringent competition from the global sellers. However, expected fall in the feedstock Propylene may soon push down Polypropylene prices.”