North American prices for polypropylene resin are down an average of 2 cents per pound since Oct. 1, amid lower feedstock costs and lackluster demand.
That drop negates 1-cent hikes from July and September. Regional PP prices were flat in August.
Market watchers told Plastics News that North American PP sales up are up less than 2 percent so far in 2019. Factoring out export sales leaves domestic demand slightly negative for the year.
Export sales have more than doubled, but from a small base, adding only 25 million pounds per month to a market that is measured in billions. Demand from domestic markets — with the exception of sheet — has been down because of an overall soft U.S. economy. U.S. GDP growth for the third quarter checked in at 1.9 percent.
Earlier this year, a 4-cent PP price drop in June canceled out an increase of the same amount from May. The last major price move for the material came between November 2018 and March 2019, when PP prices tumbled 24.5 cents.
Reduced PP price volatility in recent months is the result of improved supplies of monomer for the region, sources said.
The North American PP market "is in transition right now," according to Scott Newell, a market analyst with Resin Technology Inc. in Fort Worth, Texas.
"Operating rates are high, but demand isn't good at all," Newell said. "The whole industry is full of inventory, from monomer to resin to the converter level."
At the recent K 2019 trade show in Düsseldorf, Germany, Plastics News spoke with executives from PP makers LyondellBasell Industries and Braskem. Ken Lane of LyondellBasell said that global PP growth is expected to continue at a 4 percent annual rate, with North American growth at 2-3 percent, even though North America is off that pace this year.
"There's still a lot of packaging demand [in PP]," said Lane, executive vice president of global olefins and polyolefins for the firm. "Automotive is down, but it won't stay down forever, especially with growth from electric vehicles."
Braskem is adding a little more than 1 billion pounds of annual PP production in La Porte, Texas, in the second quarter of 2020. North America Executive Vice President Mark Nikolich said the primary target of PP made by the new line is the U.S. market, although he said it will also support the firm's efforts in Brazil and Europe.
"We built in the U.S. because the U.S. has been structurally short on polypropylene," he explained. "North American converters want to grow, but they can't because the market's been constrained."
Nikolich added that he's unconcerned by a slow 2019 growth year in North America, where sales have fallen short of the 2.5 percent average that the firm expects in the current market.
"There's been a shortfall in North America, but in the last four years we've had years of 1 percent growth and 7 percent growth," he said. "This year, it's the same thing that we've seen in base chemicals. Growth has been affected by a lot of different factors, but we're still seeing demand growth in North America."