Polypropylene prices drop 10 cents in April

By Frank Esposito
Senior Staff Reporter

Published: May 2, 2013 2:53 pm ET
Updated: May 2, 2013 2:56 pm ET

Related to this story

Topics Materials, Materials Suppliers, Resin Pricing
Companies & Associations American Chemistry Council

AKRON, OHIO — North American polypropylene resin process tumbled yet again in April, sliding down an average of 10 cents per pound.

The 10-cent slide comes after prices fell an average of 6 cents per pound in March. Prior to that, regional prices had jumped 21 cents total in January and February. So prices remain up by a net of 5 cents per pound so far in 2013.

The April drop “was driven by refineries coming back up, along with some help from [propane dehydrogenation] units running strong,” a PP buyer in the Midwest U.S. said. The buyer added that he expects prices to fall again in May, but not to the extent of the April move.

Market analyst Phil Karig said that continued volatility is not a good thing for the PP sector.

“As much as resin buyers might appreciate the most recent downturn in prices, many know deep down that the continued volatility of PP prices is potentially or already corrosive to their relationships with their own customers,” Karig wrote in an e-mail. “No one wants to continually be talking about large price changes with a customer on what sometimes seems like a monthly basis.”

“That is corrosive because contentious price discussions can crowd out cooperative efforts in areas such as new product development,” added Karig, managing director of the Mathelin Bay Associates LLC consulting firm in St. Louis.

The April drop marks the 11th time that North American PP prices have experienced a double-digit increase or decrease in monthly pricing since May 2010, according to the Plastics News resin pricing chart. PP has become more volatile price-wise than the other major resins it competes with, as well as more volatile than crude oil, according to Karig.

“When a resin is more volatile than its peers and general market indices such as crude oil prices that is very much the equivalent of a risky stock more suitable for day trading than long-term investing,” he said.

Through March, U.S./Canadian PP demand had tumbled almost 10 percent, according to the American Chemistry Council in Washington. A domestic sales drop of 8 percent was worsened by a 48 percent plunge in export sales.

One regional PP end market that held up fairly well in that dreary three-month period was injection molded rigid packaging, where sales essentially were flat at about 576 million pounds. Those applications — including cups and containers, caps and closures and crates and totes — accounted for almost 16 percent of domestic PP demand in the first three months of the year.


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Polypropylene prices drop 10 cents in April

By Frank Esposito
Senior Staff Reporter

Published: May 2, 2013 2:53 pm ET
Updated: May 2, 2013 2:56 pm ET

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