North American prices for polypropylene and PET bottle resin surged in different directions in June.
PP prices in the region tumbled 10 cents per pound in June, matching a similar price decline for polymer grade propylene (PGP) feedstock. Prices for the material had declined 7 cents per pound in May. Combined with other increases and decreases, PP prices now are down a net of 5 cents so far in 2022.
Strong North American gasoline demand is increasing supplies of propylene, which is a by-product of gas refining. Demand is up from the summer driving season and from refineries working to get back to full production after the pandemic. Those higher propylene inventories then are causing prices to decline, with those declines passed on to the PP market.
On a June 29 webinar hosted by the Manufacturers Alliance for Plastics Processors, resin market veteran Bruce Flannery said that PP prices have been falling even though four regional PP makers are operating under force majeure supply limits for various reasons.
"There's excess PGP and it looks like that will continue," said Flannery, commodities product director with resin distributor Amco Polymers in Orlando, Fla. "Polypropylene buyers don't want extra resin on their floors with these price swings, so everyone's destocking."
Regional PP supplies will see a boost from Heartland Polymers' ongoing startup of 1 billion pounds of capacity in Strathcona County, Alberta. Exxon Mobil Chemical will bring on a similar amount of new PP capacity on Baton Rouge, La., by the end of the year.
PET bottle resin continued its incredible pricing surge in 2022 by jumping 13 cents in June. Prices for the material were up 6 cents in May and now are up 48 cents so far in 2022.
Strong seasonal demand for bottled water and other beverages has played a role in the price surge, as well as a lack of new capacity and freight and logistics challenges.
While the current gasoline market is dampening PP prices, it has lifted prices for paraxylene, a PET feedstock which also is used as a gas additive.
PET demand typically increases in spring months, as beverage companies prepare for stronger demand brought on by warmer weather. Bottled water accounted for almost 25 percent of the U.S. beverage market last year, according to consulting firm Beverage Market Corp.