Updated to mid-August 2009
Asian market review by Chow Bee Lin, ICIS pricing
Asian average weekly prices of injection and yarn grade polypropylene (PP), block copolymer, imported isotactic polypropylene (IPP) and biaxially oriented polypropylene (BOPP) prices rose by 4.9-13% from $1,010-1,140/tonne CFR (cost and freight) China/SE Asia (southeast Asia) in mid-May, to $1,120-1,280/tonne CFR China/SE Asia in mid-August. Prices rose gradually in this period, driven by high crude and propylene values.
European market review by Linda Naylor, ICIS pricing
Availability of PP in Europe began to tighten at the end of the second quarter 2009, and by August some grades were short. Cracker reductions, implemented principally to reduce ethylene availability, inevitably affected propylene output and consequently PP availability.
Export activity was strong in May and June, and producers exported PP to Asia at better netbacks than they could get in Europe. July and August prices rose due to the supply/demand balance, and producers were preparing their customers for more hefty hikes in September.
Producers were expecting increases in September propylene which they would attempt to cover. The stock position in Europe was so low that producers were confident of bringing prices up.
New capacities in the Middle East and Asia were expected to have a negative effect on pricing by the end of 2009. At time of writing there was little imported material on offer in Europe.
US market review by David Barry, ICIS pricing
PP prices were on a steady upward trend in the US that began in January and continued into August. This was not due to any exceptional pickup in domestic demand, but rather to a healthy export market during the second quarter and also rising crude oil and gasoline prices.
With nearly 70% of the US propylene supply taken from refineries and the remainder coming as co-product from ethylene crackers, propylene/PP chain economics were increasingly dictated by the energy markets.
US sellers saw exceptional PP export volumes to China during March-May as stimulus spending in that country led to higher demand for plastics used in durable goods. Export activity then dropped off during June and July as US PP prices rose sharply.
Domestic resin prices were up by a combined 11 cents/lb in May and June, and further increases based on cost pressures were seen in July and August. PP margins also showed signs of weakening in the summer months due to lacklustre domestic sales and the reduced competitiveness of US exports.
Latin America market review by George Martin, ICIS pricing
The May-August period brought a continuation of price recovery for PP in Latin America, with gains in all countries except for Venezuela, which kept prices constant throughout the year 2009.
The recovery was more pronounced in Brazil that had prices noticeably higher than those of most other countries in the region, thanks in part to the PIS/Cofins tax that is built into their prices and adds about 9.5% to all values.
In Argentina the rebound was steady, but not as fast as Brazil’s. PP prices in Argentina were more compatible with those of Chile, Colombia and Mexico.
In countries like Chile, Ecuador and Peru, prices did not rise as quickly due to intense competition among regional, US Gulf and Asian producers. Chile experienced production problems in May and June due to shortages of feedstock propylene.
Asian product lost competitiveness due to higher feedstock costs, and Brazilian producers, in particular, offered material at very aggressive prices.
Colombia exports nearly half of its PP production and was strongly affected by currency fluctuations and competition from other regional producers.
Portfolio control became more important in all countries due to a tightening of credit lines.
Prices of PP in Mexico continued their rebound in May, following feedstock behaviour.
Venezuelan PP prices have been steady throughout 2009 due to a fixed exchange with the US dollar and long inventories of high-priced material in the hands of the local producer. Venezuelan transformers continue to pay the highest prices in the continent, although prices in Brazil are quickly closing the gap.
The above-described scenarios can be applied to all grades of PP.
Polypropylene
Uses and Outlook
Polypropylene's (PP) intrinsic properties of high stiffness, good tensile strength and inertness toward acids, alkalis and solvents, plus its cost advantage over other thermoplastic polymers, has secured its position in a wide range of consumer and industrial products, manufactured by several high-volume forming methods. In addition, its low density and cost advantage over other thermoplastic polymers make it suitable for applications that are weight and cost conscious.
More about Polypropylene Uses and Outlook
Polypropylene
Process Technologies
The first commercial production of polypropylene was in the 1950s following the discovery of Ziegler-Natta catalysts. It was produced initially in a slurry process where propylene is reacted in the presence of a catalyst in solvent to produce a mixture of crystalline and amorphous polymer. The disadvantage of this route was that the catalyst had to be treated with alcohol to deactivate and extract it, while unwanted atactic polymer had to be extracted and removed.
More about Polypropylene Process Technologies
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