What Causes Polypropylene Prices to Rise in Europe but not in the US and Asia, Feb 2024

In a continuation of the stable trend observed over the past three weeks, the US Polypropylene (PP) market has maintained unwavering stability, with prices remaining unchanged during the last week of February 2024. This trend is particularly evident in the PP Copolymer Grade DEL Houston segment, emphasizing a sustained period of equilibrium and pricing steadiness. The average price for this grade over the week was recorded at USD 1106/MT, indicating a balanced market where the interplay of supply and demand has led to minimal fluctuations in Polypropylene prices.

Contrary to the global stability, the European region experienced a notable 3% increase in PP prices this week. The driving force behind this upward trend was the adjustment in production costs, notably the rise in the price of feedstock Propylene by approximately 2% since the commencement of the new year. Despite stable demand within the region, the supply remained categorized as low to moderate. The effects of the Red Sea crisis diminished during this period, yet a scarcity of the product persisted, leading to an average price of USD 1310/MT for PP Injection Moulding FD Hamburg over the week.

In the Chinese market, even though Chinese industry participants have not fully resumed their work routines following an extended holiday, the PP markets have officially reopened, showcasing new cost-driven price increases domestically. Elevated energy prices provide a solid cost foundation, enabling sellers to increase their offers compared to the pre-holiday period. Simultaneously, the trading atmosphere remains cautious due to a slower-than-anticipated demand recovery and prevailing supply pressures domestically, adding pressure to market sentiment and constraining potential PP price increases.

Despite the stable trend in the Asian PP market, a notable 1% increase in PP prices were observed in the Singapore market as traders strategically adjusted prices to optimize margins, responding to the steady pricing observed over the last three weeks. The decreasing impact of the Red Sea crisis on freight rates across the Asian trade route has created a good trading atmosphere further led to improved demand from overseas markets, contributing to this upward trend. The average price for PP Block Copolymer CFR Jurong settled at USD 980/MT over the week.

As per ChemAnalyst's analysis, the price of PP is anticipated to either decrease or remain stable in the initial half of March 2024. This expectation is based on the improvement in product supply following the resolution of the Red Sea crisis, coupled with a decline in global freight costs. The demand for the product is expected to maintain stability in the upcoming weeks, with the price trend of PP continuing to be influenced by supply chain dynamics.