North American prices for polypropylene resin plunged an average of 6 cents per pound in October, resulting from lower feedstock prices and a decline in domestic demand.
Prices had been down 4 cents in September after increasing 2 cents in August.
The October PP drop followed a similar drop in prices for polymer grade propylene monomer feedstock — as it did in September.
In a recent market report, PP supplier Blue Clover of New York said that current PGP supplies "are ample and [PP] continues to work down inventories in a sluggish demand market."
The report added that domestic PP demand for September was down 12 percent vs. August. PP days of supply "are the highest they've been this year so far," officials said.
Combined with previous increases and decreases, PP prices now are down a net of 3 cents so far in 2024.
In spite of prices for both PP and PGP dropping a total of 10 cents in two months, Blue Clover said there are "some bullish signals" for both materials, such as a strengthening propane fuel market heading into the winter heating season and possible year end buying from processors to take advantage of low prices.
PP and PGP markets also could benefit from PP makers lowering operating rates to take excess inventory out of the market.
Longer-term, North American PP consumers "have been caught in a tough spot for years," according to a recent report from Esteban Sagel, principal of Chemical & Polymer Market Consultants in Houston. Appropriately, the report was titled "Between a Rock and a Hard Place."
"Over the past decade and a half, [PP consumers] have dealt with stubbornly high prices compared to other regions and polymers, erratic supply, and severe market volatility," Sagel said. "No matter how you cut it, PP in North America is exorbitantly expensive."
He added that since 2010, homopolymer PP prices in North America have consistently exceeded those in China and have been subject to extreme fluctuations. The root cause of this, Sagel explained, is a steep decline in North American propylene, which has driven up both propylene prices and their volatility.
This price differential has led to an increase in imported goods made from PP. The amount of PP film imported into the U.S. and Canada increased at a 7.5 percent annual rate from 2015-22.
North American PP resin also has become more expensive than competing materials, Sagel said. August PP contract prices were 13 cents higher than those of high density polyethylene.
One solution to this challenge, according to Sagel, would be importing PP resin from overseas. But he added the logistics of doing so are more complicated than they appear, since PP in North America is largely consumed in bulk and transported via railcar, while imports are typically traded in 25 kilogram bags or supersacks.
"This logistical complexity creates a non-tariff barrier to imports," Sagel said.
But U.S. PP consumers "have found ways to navigate these hurdles." The U.S. imported a record amount of PP resin in 2021, although numbers are down from that point.
In spite of these challenges — and as a result of ongoing high prices for domestic PP — Sagel said "it's time [for North American processors] to explore importing PP from overseas. It's the only viable strategy to stay competitive against both imported finished goods and alternative materials."