August Polypropylene prices rise in North America

20-Aug-09

North American makers of polypropylene have raised prices by 4 cents per pound since Aug. 1. Regional PP prices now are up an average of 26 cents per pound since Jan. 1. That works out to a 46% price hike on injection molding grades of homopolymer PP. As exports dipped, producers curbed production so as to control inventory. The move is tied in to a sharp spike in prices for propylene monomer feedstock. Propylene supplies for PP use have been constrained by demand from the gasoline market and from producers’ use of natural gas-based ethane feedstock, which produces less propylene that crude oil-based naphtha feedstock. Ethane increasingly has been used because of low natural gas prices, when compared to crude oil, as per Plasticsnews. Polypropylene prices in August 2008 peaked to such an extent that it was being made at a loss, and that killed the export market. A temporary outage at a steam cracker jointly operated by BASF Corp. and Total Petrochemicals USA Inc. in Port Arthur, Texas, also has affected regional propylene supply. Exports in 2009 have not reduced as drastically as anticipated, since barely 50% of the new PP capacity that was expected in India and the Middle East has come onstream. Infact, domestic sales of PP in USA excluding exports showed a sales drop of 14%. If exports continue to drop, as they have recently, results for suppliers should worsen, since buyers contacted this week by Plastics News weren’t optimistic when speaking of demand in August and for the rest of 2009.