Rising feedstock costs and improving demand sent North American polypropylene resin costs up in July.
The 6-cent-per-pound increase was tied to higher prices for polymer-grade propylene monomer. Market sources also told Plastics News that several producers — including Dow Inc., Enterprise Products, Total Petrochemicals, Ineos Group and Formosa Plastics Corp. USA — had supply issues in July on either propylene monomer or PP resin.
North American PP prices had increased by 1 cent in June after being flat in May. Some PP end markets also are seeing improved demand as North American consumers adjust to the effects of the COVID-19 pandemic.
"There were some big production outages in July and inventory was drawn down by 90 million pounds," said Scott Newell, a market analyst with Resin Technology Inc. in Fort Worth, Texas. "The [PP] market felt tighter. Domestic demand is still down on the year overall, but it's starting to come back."
Market sources said that North American PP demand is down 5 percent so far in 2020, due in part to a drop of about one-third in sales to the automotive market. Many global auto plants closed during the COVID-19 outbreak.
Other markets, including exports as well as housewares, caps and closures and cups and containers, have seen improved demand, owing in part to consumers spending more time at home during the pandemic. Medical uses, such as N95 face masks, which are needed to protect health care providers, also have led to increased PP demand.
PP demand "remains very strong and supply is the tightest it's been in all of 2020," officials with distributor/consultant Blue Clover Polymer Solutions in Princeton, N.J., said in a recent research note. They added that recent PP outages "lasted substantially longer than expected."
"These PP supply shocks, combined with ramped up demand from converters, are leading to not only increased prices but a lack of spot material by many producers," they added.
The regional PP market could see a smaller price increase in August, although recent swings in PGP prices have led market watchers to believe that's not a done deal.
RTI's Newell described August as "a transition month" for the PP market.
"Monomer supplies should come back and demand might slow down if buyers are just replenishing their inventory," he said. "If that happens, we could see monomer and resin prices coming back down."
North American PP supplies were improved in late June, when Braskem SA completed construction of a new PP resin plant in La Porte, Texas. Officials with São Paulo-based Braskem said that the billion-pound-per-year-capacity plant is the first new PP facility built in North America since 2003. They added that the plant has export capacity to serve clients worldwide.