Quarterly Update on Global Polypropylene (PP) Market
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.