North American polypropylene resin prices dropped an average of 2 cents per pound in May, matching a price decrease for polymer-grade propylene (PGP) monomer feedstock.
It's the second consecutive monthly price decline for PP and follows a 10-cent drop in April. That April move also matched a PGP price drop.
These back-to-back price declines for PP in North America have reversed a trend that had seen prices increase for three consecutive months and six times in the previous seven months. Combined with previous increases and decreases, regional PP prices now are down a net of 2 cents so far in 2024.
PGP supplies had been tight earlier in 2024 because of mechanical issues at production sites and the effects of a brief cold snap in Texas, where much regional PGP and PP production is located. But most of those units have returned to full production.
PGP prices had been up in early May, according to a report from PP supplier Blue Clover of New York, but then declined. Supplies for PGP improved as more production came back online from first-quarter outages, the report said.
Blue Clover added that demand for PGP derivatives such as PP "is stagnant as a result of lower consumer spending on goods in the economy." The firm expects contract PGP pricing to bottom out in June, be flat for July and then start to climb higher in August.
In a recent report, Houston-based consulting firm C-MACC said that a drop of more than 3 percent in Brent crude oil prices since the end of May “suggests lower export prices and downward pressure on U.S. domestic propylene derivative prices … [as a result] limiting producer margin gain ambitions.”
The report added that C-MACC’s near-term sentiment “remains negative towards U.S. propylene and most domestic petrochemical prices,” even though a price collapse “is unlikely in the near term…but this prospect will increase in the second half if a positive factor for chemical prices – [such as] higher oil, unplanned outages, improved global demand – does not materialize.”
In a recent PP forecast, market analyst David Barry of PetroChem Wire in Houston said North American PP makers are expected to keep operating rates low, in line with demand forecasts, further into 2024.
Potential PP capacity additions for 2024 include more than 500 million pounds of additional production form Formosa Plastics Corp. USA in Point Comfort, Texas.
New entry Heartland Polymers also opened a new unit with annual PP production capacity of almost 1.1 billion pounds in Strathcona County, Alberta, in late 2022. At the recent NPE2024 trade show, PP sales and marketing director Yonas Kebede said Heartland will launch a grade of random copolymer PP resin for injection molding later this year.
Kebede added Heartland has made considerable progress as North America's newest PP supplier.
"We made our first pellet in June 2022 and made limited amounts of resin that year," Kebede said. "In 2023, we pushed out significant amounts of volume into the marketplace."
He added that he was pleased with what Heartland has been able to do as a new entrant in the market. "We were very fortunate out of the gate," Kebede said. "Our [biaxially oriented PP] resin is one of the best out there and our customers have been amazing."
Heartland's unit making propylene monomer at a propane dehydrogenation (PDH) plant at the site went offline because of a mechanical issue in March but will be back online by the end of May. That unit had launched in late 2022, providing on-site feedstock for North America's only integrated, single-site commercial PP production.