November marked another chaotic month for polypropylene pricing, a market that has shifted dramatically in 2021.
PP prices plunged 13 cents in November after tumbling a total of 12 cents in October and September. Resin prices are following those of polymer-grade propylene monomer, which are in serious decline.
Market sources said that although North American PP demand remains solid, it's leveled off a bit in recent months. Production of the material also has improved.
"The market has completely shifted — it's a buyer's market," said market analyst Scott Newell of Resin Technology Inc. "Demand is off and supply has caught up."
He added that the U.S. has seen record amounts of imported PP available in the last two months, on top of excess domestic production.
"Earlier in the year, processors had orders out because they didn't know where their next pound of resin was coming from," Newell said. "Now, producers are facing a lot of challenges late in the year, since processors aren't buying ahead."
Esteban Sagel, principal with Chemical & Polymer Market Consultants in Houston, said that propylene availability and price "is the key here."
"I expect propylene and PP prices to moderate a bit more, and PP margins for non-integrated producers to be challenged as they are forced to compete with PE for market share," he added. "My biggest concern is volatility."
Even with the recent declines, PP prices are up a net of 54.5 cents since December. During the GPS event, IHS Markit PP analyst Joel Morales said that the North American PP resin market is moving from being tight to well-supplied. "Demand has been stellar, but it's slowing," he added.
PP resin prices "are expected to decline with improving supplies," Morales said. "But the long term favors sellers, because of strong demand and because shipping costs insulate Western markets."
In North America, 5 billion pounds of new capacity through debottleneckings or expansions have been announced. Most recently, Braskem Americas added 1 billion pounds of new capacity in La Porte, Texas.