DÜSSELDORF, GERMANY (Nov. 26, 12:20 p.m. EST) — Polypropylene's growth is showing more stamina than that of other commodity resins — and that's prompting Dow Chemical Co. to launch new grades of its Inspire-brand PP.
Two of the new grades have high melt-flow rates and higher productivity, while an additional two offer improved taste and odor performance, global PP business director Julie McAlindon said in an interview at K 2007 in Dusseldorf.
The taste and odor performance of the latter two new grades are similar to water for food applications, and they also have good performance in cold temperatures. All four grades are in commercial production at a Dow plant in Wesseling, Germany, with U.S. production a possibility, McAlindon said.
In 2007, North American PP makers have benefited from a boom in export sales, prompted by rising global raw material costs and the sliding value of the U.S. dollar.
“Exports are fairly good and that's propped up operating rates,” McAlindon said. “The overall market should grow 6 percent globally. Some emerging geographies will grow 6-9 percent. Western Europe should be at 4 percent and North America looks to be flat to slightly up.
“Global utilization rates are high and supply is fairly tight overall. North American operating rates right now are at about 94 percent.”
The price differential between North America and the rest of the world “will enable the arbitrage window to continue” into the first half of 2008, McAlindon added. That should help the domestic market, where sales were down 3 percent through August.
“Fibers, carpet and some films [made of PP] can be imported into North America,” she said. “It's based on how complex a product's packaging is, how freight-efficient a product is and whether [a supplier] can get enough units into a container.”
Globally, much capacity is being added in the Middle East and parts of Asia. Capacity should be relatively flat in North America, with Dow playing a role by recently announcing the shutdown of 500 million pounds of capacity in Louisiana. That move negated capacity additions announced by Basell Holdings NV.
“When you look at all the annual capacity being added, 2008 and 2009 look to be the peak years,” McAlindon said. “Later in 2008, that will start to have an impact on North American demand and export additions.
“On a global basis, there could be excess supply for as long as eight years. Supplies are tight now, but that's going to change and that will affect profitability.”
Dow has no current plans for capacity additions at its two German PP plants or at its two remaining U.S. PP sites. Instead, McAlindon said the business will focus on new impact and specialty grades and on making smaller capital investments.