US Propylene Price Decline in March 2025 Despite Downstream Polypropylene Price Surge

The propylene prices in the US market have continued to decline during March 2025 on the back of constant weakening in the feedstock crude oil prices. Despite the prices of the downstream polypropylene having seen a significant surge, the demand for propylene from the polypropylene sector has failed to materialize. The tariff-related uncertainty and the lull trading atmosphere from the downstream polyester sector have led to a significant decline in propylene prices.

Key Takeaways:

• The continuous decline in the feedstock crude oil prices lowers the manufacturing costs of propylene.
• Despite an increase in polypropylene prices, the demand from this sector remained low.
• The downstream polyester sector showcased no improvement during March 2025.
• Consumer spending remained weak amid uncertainty regarding the potential tariffs from the US market.

As per ChemAnalyst, the propylene prices in the US market are expected to further decline in April 2025 due to uncertainty regarding the trade tariff policies by President Trump. Moreover, the unfavorable export demand from the downstream polypropylene industry is foreseen to remain low due to attractive pricing cargos originating from Asia and the Middle East accompanied by uncertainty due to the tariffs.

As of now, the prices of Propylene Polymer Grade DEL US Gulf have significantly declined by 10.8% during March 2025 on a month-on-month basis due to the low trading atmosphere. The primary driver for the price decline was associated with the lower manufacturing costs. In March 2025, the feedstock crude oil prices dropped significantly by 3.6% due to potential OPEC+ output increases. This decline has eased the production costs and increased the inventory levels during this period.

Moreover, the market was marked by unfavorable demand conditions from both the international and domestic players due to tariff-related uncertainty. President Trump imposed 10% tariffs on Chinese imports and an additional 10% tariff on March 4, 2025. As a retaliatory action, the Chinese government has also imposed 25% on the US import which declined the consumer sentiments globally.

Polypropylene is the single largest consumer of propylene, accounting for 90% of global demand used in the packaging and polyester sector. Despite a surge in the downstream polypropylene prices, the overall terminal demand to acquire propylene remained low. Several market participants observed that the downstream polyester demand has not been increasing post-Lunar New Year.

Business confidence has dropped compounded by a weaker-than-anticipated recovery in foreign trade due to the suppression of tariff policies and dampening of companies' investment to procure raw materials.