For the Quarter Ending March 2022
In North America, the prices of Polypropylene increased in Q1 2022, with a decline at the beginning of the quarter in conjunction with prices hovering around USD 1957/ton PP Homopolymer Injection Grade FOB Texas in the USA due to low demand from the downstream sector and a decrement of 2.4% in the first quarter as compared to the previous. However, the prices were increasing by February against the backdrop of fewer imports, logistic issues, and a shortage of supplies. Due to the rise in crude values, polypropylene prices were majorly growing as manufacturers were left with no option but to pass on the cost pressure to consumers. The USA contributing around 6.15% of the world's total Polypropylene exports, saw an increase in freight charges due to the ongoing Russia-Ukraine war.
Asia saw an increase in the price of Polypropylene (PP) in the first quarter of 2022, with a spike of 6.2% in February and prices hovering around USD 1592/ton-USD 1702/ton Injection moulding Ex-Silvassa. However, there was an overall decrease of 2.3% in Q1 as compared to the last quarter of the previous year. China, which is importing around 17% of the world's total Polypropylene, saw an escalation in the shipment and freight charges. Energy prices have been on the rise, adding to the cost pressure on the Polypropylene market. However, despite an increase in inventories, pricing dynamics for the product did not decline and followed the path of the market price in an upward trajectory.
During Q1, the price of Polypropylene escalated upwards throughout February and into March, as a shortage of natural gas supplies combined with soaring crude oil prices caused most of the refineries in Europe to run on negative cash margins since the last week of January. Feedstock propylene monomer prices have come under pressure due to higher naphtha prices since the last week of February as the onset of war in eastern Europe. Naphtha crack spreads, too, have come under pressure due to higher energy costs and a rise in feedstock crude oil prices. Polypropylene Injection prices for March were assessed at USD 2020/ton FD Hamburg, with a 6.6% decrease in the prices in Q1 compared to the previous quarter in Germany.
For the Quarter Ending December 2021
Polypropylene market in North America saw a reduction in overall demand for the quarter ending December compared to Q3 of FY21. The propylene to polypropylene spread had narrowed significantly by the closing weeks of December normalizing any worthwhile gain in margins accrued by manufacturers and distributors during the months of September and October taking advantage of the historically high freight charges during that period. The second half of Q4 saw a decline in demand for polymers which is a general phenomenon ahead of the holiday season. As per our initial assessment for Q1 of FY22, the propylene to polypropylene spread had further narrowed due to polymer markets across South Asia, Middle East and North America reeling in doldrums amidst the new wave of pandemic disrupting both domestic and overseas demand. Prices of polypropylene are expected to rebound during the early to mid-February period when North America and Europe typically face disruption in value chains due to higher energy costs as well as the cold snap in Texas.
The North-East Asian polypropylene market saw a reduction in demand during Q4 of FY21 after having started off on a strong note in the month of October. Spot prices had reached an inflection point during the first week of November and have started falling since. Prices of Raffia, Injection and random copolymer have seen a decrease of 3% on an average from Q3 to Q4. Imports into China had plummeted to the tail end of Q4 when the Chinese government started issuing strict COVID control protocol which led to clogging of major container terminals such as Ningbo. Although production and supply had been tight in the new year leading to a hike in prices, prices are expected to come down by the end of January ahead of the lunar new year holidays. The long-term outlook for Q1 of FY22 however looks bullish.
Indian polypropylene market had a similar trend to that of its Asian counter parts as prices reached an inflection point by the second week of November. The down trend in spot prices continued till the end of Q4 and could continue into Q1 of FY22 as the continued clogging at major ports in Northeast Asia means that there could be a further fall overall demand and the surplus produce will have to be channelized into the domestic market. Import prices of Raffia MFI3 from the middle east too had softened by the mid to third week of November FY21.
European polypropylene market had made marginal gains in Q4 of FY21 compared to the previous quarter as average price for polypropylene copolymer increased by 2% assessed on an FD Hamburg basis. The propylene to Polypropylene price spread widened during Q4 as there was higher arbitrage margin for imports from the middle east compared to prices from the regional suppliers which lead to a surplus of propylene in the European market. The spike in energy costs from the first week of December did not have much of an impact on the prices of polymers as demand reduced ahead of the holiday season in Europe and had offset any upward pressure on the prices.
The outlook for Q1 of FY22 remains uncertain as the volatility in polymer market had been remarkably high in the new year due to the onset of the new wave of pandemic which led to disruptions in global supply chains leading to a disruption in market signals. Domestic demand is expected to be the driving force for the upcoming quarter while overseas demand could recover by the end of February Fy22.
For the Quarter Ending September 2021
In North America, surge in the prices of Polypropylene was observed during the third quarter of 2021 backed by the constraint availability of upstream Propylene. Supply of Propylene remained tight in the US market as several manufactures were compelled to shut their production units as a repercussion of Ida hurricane in August across the Gulf Coast in US. For instance, Phillips 66 imposed a temporary turnaround at its Propylene facility in late August as a part of the contingency plan. Moreover, firm demand from the downstream sectors aided the pricing trend in this quarter.
In Q3 2021, Polypropylene (PP) market outlook appeared bullish with robust demand and tight supply in the Asia Pacific region. Constant increment in the prices of Polypropylene was backed by surging prices of key feedstock Propylene. In addition, sudden plant outages in the region led to the scarcity of the product that further aided the pricing trend. For instance, Neftekhim Limited in Kazakhstan’s, declared a maintenance turnaround at its Polypropylene plant in September end, for around a month. In India, Polypropylene fundamentals gained edge because of the supply shortage at international levels due to the constraint availability of the upstream Propylene. Ex-Silvassa Polypropylene prices settled at USD 1555.11 in September.
During the third quarter of 2021, Polypropylene market in Europe witnessed a downward trend backed by the ample availability of the product amidst its dampened demand. In the European region, improved import rates and higher production rates led to the adequate supplies of PP in the region that consequently declined its prices. Moreover, by the middle of the quarter due to the energy crisis across the region various downstream manufacturers were compelled to cut the operating rates which resulted in slowed market activities. Polypropylene prices thus declined to USD 2270 per tonne from USD 2492/MT in July to September time frame.
For the Quarter Ending June 2021
During the second quarter of 2021, the industrial infrastructure recovered from the devastating impact of the winter storm Uri, and all Polypropylene (PP) production units returned online with improved operating rates. As a ripple effect, PP supplies in the North American market surged compared to the previous quarter, however some tightness was seen during April. Several US polymer producers announced positive revision in the prices due to continued tightness of the raw material. Formosa plastics surged the prices of all grades of Polypropylene resin by USD 110 per tonne in May. The demand was bolstered by pick-up in the manufacturing sector and rising requirement of the consumer durable goods. FOB Texas discussion for Polypropylene Homopolymer injection moulding grade settled at USD 2995 per tonne in June.
Polypropylene (PP) supplies in the Asia Pacific region surged during the second quarter of 2021, with the industry reporting normal operations and high pressure over the key feedstock Propylene due to the rising inflation rate in Chinese commodities. May Day holidays and power shortage in South China’s Guangdong province further tightened the market supplies. India’s deadly COVID second wave had a devastating impact on the industrial and commercial activities for a larger part of Q2, hence the country reported a much-needed ease in its Polypropylene resin offers. Resurgence of COVID infections and lower offtakes from the southeast Asian markets reduce the demand outlook, sending ripples to the prices of Polypropylene throughout Asia Pacific. FOB Qingdao pricing discussion of PP raffia grade settled at USD 1263 per tonne in June.
At the start of Q2, the European Polypropylene market faced acute polymer shortage, which hit numerous small and medium enterprises (SME) and around 90% of the European converters. Therefore, PP supplies remained largely tight throughout the second quarter of 2021. The import situation from the US improved but the fewer and high-priced import shipments were insufficient to fulfil the domestic demand. Several consumers headed towards Chinese suppliers to fill-in the supply gaps. Polypropylene raffia grades prices settled at USD 1914 per tonne for the July delivery.
For the Quarter Ending March 2021
In the first quarter of 2020, the supplies of PP became affected as several US producers bound the margins for the downstream converters due to surged demand and limited stock availability throughout the region. Freezing temperatures brought various petrochemical and polymer production units to shutdown including the ones of global giants such as LyondellBasell and INEOS olefins & polymers. Amidst persistent shortage, PP prices witnessed multi-fold surge in February, thereby prompting several buyers to turn to imports from the Asian markets. Rates of PP Injection Moulding grade spiked by nearly 40% between Jan-March. FOB Louisiana (USA) PP IM grade price was recorded above USD 2400 per Mt in the last week of March.
The supply of Polypropylene stood balanced in the northeast Asian region during the Q1 2021. The addition of four new facilities in China and the resumption of major key facilities in South Korea, added to the regional supply. However, the southeast Asian region witnessed constrained supplies amidst lack of overseas imports. The demand in India surged due to increased consumption from the downstream market to manufacture surgical masks followed by resilient demand for BOPP films from packaging sector. The increasing trend was further pushed by high crude prices which crossed USD 60 per barrel in March. The CFR prices of Polypropylene Raffia grade in the Indian market was averaged around USD 1633 per tonne in Q1. The emergence of new COVID-19 variants in several parts in Asia, however kept the sentiments raised by the downstream converters.
During the first quarter of 2021, PP supplies remained constrained, as a ripple effect of the tight supply of feedstock propylene due to the slump in production amid the ongoing pandemic and lockdown restrictions. Whereas the strong consumption from the downstream packaging and automotive sector, surged the demand of PP in the European region. The tight supply amid the surged demand concluded a triple digit rise in the prices of Polypropylene in the Europe.
For the Quarter Ending September 2020
The Q3 results of the Asian Polypropylene remained lull despite gradual pick up in the economy in the third quarter. In southeast Asia and India, fears of a second Covid-19 wave extended semi-lockdowns in several countries, pressuring the recovery in demand for the finished plastic products. Polymer prices in southeast and south Asia remained suppressed in the mid-August because of weak fundamentals but rebounded in the initial weeks of September when supply tightened due to lesser US-origin PP supplies to Asia backed with robust PP demand in China.
North America remained silent in terms of showing any big move as several US manufacturers remained shut and production loss aggravated. Two major players LyondellBasell and INEOS declared force majeure on polypropylene (PP) production during the quarter while they opted for precautionary shutdowns ahead of the hurricane Laura, thereby restricting global availability of the product. Polypropylene prices took a substantial leap during the quarter with limited export activity with major increases expected in the next two months.
PP demand seemed to improve during Q3 2020 with the demand in Europe gradually improving towards the end of the year, turning notably stronger than in Asia. Resilient demand from the automotive and medical sector further strengthened the market outlook. Total’s force majeure on the PP plant, announced in early August, did not impact the market negatively, as other producers reported lesser inventories while buying activity seems turning largely to pre-pandemic levels in the upcoming quarter.