Quarterly Update on Global Polypropylene Filament Yarn (PPFY) Market
For the Quarter Ending June 2021
Supply conditions in the North American region improved compared to the previous quarter but continued material tightness was seen due to limited stocks of the raw material PP in the regional market. With majority of PP being diverted towards the consumer durables sector, some PPFY producers were heard scrambling for PP resins. Demand from the downstream textile sector was balanced as the buyers were reluctant to procure the raw material at surged cost. Limited supply with firm demand on back of high-cost feedstock propped up the regional PPFY offers in Q2 2021.
During the second quarter of 2021, the supplies of PPFY in the Asia Pacific region observed an improvement as inventory levels were ample to cope up with the end use demand from the downstream textile industries. However, the Chinese PPFY market observed a negative impact due to rising inflation rates as surges in upstream Propylene pushed up the production cost of several PPFY manufacturers in China. Whereas the Indian manufacturing units were badly impacted after the second COVID wave restricted the commercial and market activities. Pressured under demand slowdown, PPFY prices traversed downward trajectory in India with Ex-works discussions settling at USD 1686 per tonne at the start of Q2.
The supply conditions throughout the European region, improved comparatively to the previous quarter, however tightness persisted in the European market amidst limited availability of the key raw materials. Due to the turnaround in several PDH units and key refineries curtailed the availability of the raw material impacted the production of PP-derived synthetic yarns. Several European buyers sought for the Asian cargoes in anticipation of better netbacks. The pricing trend remained upwards as suppliers preferred to transfer high-upstream costs to the end consumers.
For the Quarter Ending March 2021
In the first quarter of 2021, the inventories of Polypropylene Filament Yarn (PPFY) were tight as they were bound with the offtakes margin to produce essential commodities such as surgical mask, PPE kits etc. Various petrochemicals production unit shutdowns including several major producers such as Lyondell Basell, INEOS olefins and polymers amid deep freeze weather. The prices witnessed multifold surge during the quarter where traders became more flexible towards procurement from the Asian suppliers amid the hiked prices throughout the region.
During the first quarter of 2021, supplies were balanced throughout the region, owned to the growth in regional capacities as China commissioned four new plants including CNOOC and Shell JV. Whereas various Asian suppliers diverted their cargoes to cater the demand of western region in anticipation for better netbacks. The demand surged from the downstream markets as the resurgence of COVID in several parts in India hiked the offtakes of PPFY to manufacture PPE Kits and surgical mask. In India, Ex-depot prices of PPFY were assessed at USD 1774 per tonne in February.
The European regional PPFY market witnessed constraint supplies during the first quarter of 2021, as a repercussion of the shortage in feedstock Propylene. The regional upstream production slumped amid limited commercial and industrial activities and transportation hiccups in the northwestern European region. On the other hand, offtakes were constant from the downstream textile sector to manufacture PPE Kits and surgical mask. Thus, the triple digit hike on the prices of polypropylene proportionally hiked the prices of its derivative PPFY.
For the Quarter Ending December 2020
Shortage of feedstock Propylene across Asia compelled some of the producers in the northeast Asia to reduce their operating rates at polypropylene polymerization facilities. A leading Polypropylene player in Northeast Asia remarked that they had no choice but to shut their plants temporarily for a week amid lack of feedstock availability in the region. As the demand in Q4 witnessed marginal improvement, after suffering from weak sales or most of the year, its prices also climbed to record breaking heights in the final quarter. Restocking for the winter season demand led to the further improvement in the demand fundamentals of the Propylene Filament Yarn. Freezing temperatures during winter in several parts of Asia it also supporting in increasing the sales of winter apparels thus and pushing the demand the Polypropylene Filament Yarn demand.
Polypropylene supply in Q4 was tight, largely because strict availability for feedstock Propylene across the globe amidst increased downstream demand. Because of the increased downstream demand many buyers anticipated that the feedstock cost will rise again in January, due to the early restocking. Poly Propylene filament yarn buying interests from various downstream sectors, especially from rope industry and container bag segment considerably picked up in Q4 2020. Fibers, yarns, and filaments performed well in Q4 amidst a viable increment in their demand from packing industry as well.
Supply of feedstock Propylene remained feeble throughout amidst force majeure declared on some of the Propylene plant in Q4 following the spate of hurricanes in the Gulf region. Their demand for Polypropylene Filament Yarn firmed in Q4, as the consumption increased from manufacturing sector amidst the revival in market activities in the region. Furthermore, extreme winter season witnessed by the end of December also assisted in propelling its demand clothing segment.