Lower feedstocks costs sent North American polypropylene resin prices tumbling down an average of 10 cents per pound in April.
That drop matched a price decline for polymer-grade propylene (PGP) feedstock.
The April price drop for PP reversed a trend that had seen prices increase for three consecutive months and six times in the previous seven months.
The previous three increases totaled 10 cents, so the April drop returns prices to where they were at the start of 2024. The only month in the previous seven that didn't see higher PP prices was December 2023, when prices were flat.
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 of the regional PGP and PP production is located. But most of those units have returned to full production.
In a recent financial report, PP maker LyondellBasell Industries said its first-quarter PP sales in the Americas totaled a little more than 575 million pounds. That total is up about 4 percent vs. the previous quarter as well as vs. the same quarter in 2023.
PP supplier BlueClover of New York said in a research report that "each week it seems that the seven-month bull market in PGP has broken and a bear market has established itself."
The report added the firm estimates that physical PGP pricing will continue to trend lower into May and June.
"Supply for PGP has improved from the first quarter," officials added. They cited lower demand for PGP because of PP outages, slow domestic PP demand and low export volumes as reasons for the increase in PGP supply.
Blue Clover added in the report that "the zeitgeist among PP buyers is that pricing is sliding lower and they continue to press for lower prices during negotiations."
"Customers utilize the falling PGP prices and higher inventories … as their leverage points," they added. "However, producers counter that there are still two PP producers in force majeure [sales limits] and PP operating rates continue to run below 80 percent.
"So, while more supply is available right now, it may get reduced as customers come back to buy. Also, with lower PGP prices, [PP] producers can export more volume ... compared to the last couple of months. This gives [PP] supply another demand outlet."
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, 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.