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May 27, 2016 02:00 AM

Increased imports force PP prices down

Frank Esposito
Senior Staff Reporter
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    Plastics News is reporting an additional 2-cent decrease on North American polypropylene resin prices to reflect price erosion that took place between March and May.

    The PN resin pricing chart previously showed a 3-cent PP price drop for April. Conversations with resin buyers and other market watchers have indicated that the total price drop for the March-April-May time period was 5 cents, with buyers seeing the decreases in varying amounts at various times over that period.

    The 5-cent decline has canceled out price gains from earlier in the year, leaving regional PP prices down a net of 1 cent per pound since Jan. 1, according to the PN chart.

    PP makers ExxonMobil Chemical Co. of Houston and Formosa Plastics Corp. USA of Livingston, N.J., already have announced price decreases for June. The ExxonMobil decrease ranges from 3 to 5 cents per pound, while the Formosa downward move is 5 cents.

    Domestic PP suppliers are facing competition from material imported from several regions. Import material has found a home in North America as the region's PP production has struggled to keep up with demand. Operating rates for PP plants in North America are in the high 90s.

    PP pricing in North America has become more complicated as producers and buyers have moved away from pricing systems based on the price of propylene monomer feedstock. As a result, “everybody's price isn't moving the same amount at the same time,” according to Scott Newell, a PP market analyst with Resin Technology Inc. in Fort Worth, Texas.

    Through April, North American PP sales were up almost 1 percent vs. the year-ago period, according to the American Chemistry Council in Washington. Domestic growth of 2.3 percent was curbed by a 44 percent drop in export sales.

    Domestic PP market growth was led by the sheet end market, where four-month sales grew 10.5 percent, and by rigid packaging, which saw a 6.3 percent sales increase. The PP rigid packaging sales total includes cups, containers, caps and closures.

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