North American polypropylene resin prices surprised the market by increasing an average of 5 cents per pound in November.
The increase was tied to higher prices for polymer grade propylene (PGP) monomer feedstock. PGP prices rose because of production outages for that material.
PP prices now have increased for three consecutive months, after climbing 4 cents in October and 4.5 cents in September. Combined with previous increases and decreases, North American PP prices now are up a net of 17 cents per pound in 2023.
Supplies of PGP tightened in September and have stayed that way because of production outages at some propane dehydrogenation (PDH) units. Those include challenges at units operated in Texas by Shell Chemical and BASF/TotalEnergies. PGP supplies will be further impacted by a Dec. 4 fire at a PDH unit operated by Enterprise Products in Mont Belvieu, Texas. That unit could be down for a month, according to market reports.
Recent upswings in PP pricing are at odds with demand for the material, which has been in decline. Market sources cited American Chemistry Council data that showed North American PP demand was down about 4 percent on a monthly basis in both September and October.
In a recent market report, PP supplier Blue Clover LLC of New York said that "there's still an imbalance between physical wide-spec PP markets and PGP pricing."
"In a strong demand PP market, producers would like to achieve a 3-7 [cents per pound] premium for wide-spec homopolymer PP over contract PGP," Blue Clover said. "Instead, as a result of weak PP demand, producers are having to sell widespec PP at parity to the estimated contract PGP price and in some cases lower depending on quality of the railcar."
"When a PDH unit goes down pricing can go haywire," they added.
The November PP price hike was "another push" related to higher PGP costs, according to Howard Rappaport, a market analyst with StoneX in New York. "Overall conditions in November were not supportive of a [PP] increase," he said. "However, producers were basically successful at protecting their margins."