PP prices in North America sink to lows seen last towards middle of 2002

As demand collapses, feedstock costs deteriorate and global stockpiles rise, analysts are suggesting that injection-molding grade polypropylene prices will have crashed by 43¢ to a market average of 39¢/lb by January- as per Purchasing.com, making it the lowest monthly spot-price mark since the summer of 2002. Several processors who had procured materials and stockpiled, are stuck with high value material and need to revalue everything down. A report in the ICIS Pricing.com subscription e-newsletter says the spot prices will follow the trend of contract prices, which dropped 30¢ in November and look to drop another 10¢-15¢ in December--as upstream monomer and crude oil markets are showing no sign of rebounding. Orders have dropped by as much as 30% since the global financial crisis began. Automotive and housing-related polypropylene demand has been deteriorating as downstream converters have trimmed shifts, idled capacity and focused on clearing out high-cost inventories, as per purchasing.com. Meanwhile, some cash-strapped resin producers have been monitoring customers' creditworthiness before actually delivering product. Domestic supply cutbacks have been announced for two INEOS lines in Deer Park, Texas; a FHR line in Odessa, Texas, and LyondellBasell's Morris, Ill., plant. BASF this week announced temporary production amounting to 25% of global capacity and analysts say other major producers will follow suit soon. BASF said textile and construction customers have cut back orders, but customers in the automotive industry in particular have cancelled orders at short notice. DuPont gets 16% of sales from the auto industry, and Dow says it gets about 10% of sales from the sector, according to news reports.
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