By: Frank Esposito
January 9, 2014
North American polypropylene resin prices increased by an average of 4 cents per pound in December — moving that material close to the same price level it occupied a year earlier.
The 4-cent move allowed PP resin to again follow the path of propylene monomer feedstock. It left market pricing down a net of 2 cents per pound for 2013, according to the Plastics News resin pricing chart.
Through November, North American PP sales were down 1.5 percent in 2013, according to the American Chemistry Council in Washington. Domestic PP sales were flat, while sales of North American PP into export markets tumbled almost 33 percent.
Domestic PP sales growth was solid in injection molded housewares, where sales grew almost 10 percent, according to ACC. PP sales into the domestic sheet market also grew 5 percent in the first 11 months of the year.
Total price volatility for North American PP – including increases and decreases – was 37 cents in 2013. That's the most of any major commodity resin in the region, but actually is about half of the volatility that hit the market in 2012, according to the PN chart.
In both years, PP prices were rocked by frequent, turbulent swings in price and availability of propylene monomer feedstock. Propylene supplies have been impacted by increased use of natural gas as a petrochemical feedstock instead of crude oil. Natural-gas based ethane produces less propylene per unit than crude oil-based naphtha does.
That situation — and overall PP volatility — shows little sign of changing as the market heads into 2014, according to Phil Karig, managing director with the Mathelin Bay Associates LLC consulting firm in St. Louis.
"It's kind of like a stock with volatility," Karig said of the regional PP market. "A stock with higher volatility has more risk."
"There are various measures of volatility in stocks," he added. "Polypropylene and high-volatility stocks aren't for the faint of heart."
North American PP supplies will increase in 2014 when Rextac LLC re-opens a dormant resin production line in Odessa, Texas. That move is expected to add about 300 million pounds of annual capacity. Rextac will add a similar amount in Odessa when it opens a new line there in late 2016.
Still more PP capacity could be on the way in the next few years if North American producers are to take advantage of major new amounts of propylene that are slated to be added through "on-purpose" PDH (propane dehydrogenation) methods. Excess propane from shale gas is driving these investments. About 9 billion pounds of new propylene capacity is expected to be added in the region through 2016.