Chemical profile: Polypropylene

Source: ECN

2008/07/13

European polypropylene contract prices

USES

Polypropylene (PP) has key applications in packaging, fibers and automotive parts. PP can be extruded for pipe, conduit, wire and cable, while atactic PP has outlets in paper laminating, sealants and adhesives.

SUPPLY/DEMAND

After a strong market in 2007, with steady growth of 4.5-5%, Europe is struggling this year. Demand is poor and supply has lengthened from rising import volumes, while the weak dollar has curtailed exports. Several outages across Europe and the opening of an arbitrage window with Asia in May/June provided some support.

Older capacity is being replaced with modern process plants. Netherlands-based LyondellBasell and UK-headquartered INEOS Polyolefins shut plants in mid-2007 at Pernis, the Netherlands, and Geel, Belgium, respectively, removing 440,000 tonnes/year of capacity.

INEOS will close more capacity in Norway and France by the end of 2008 and the end of 2009, respectively, but is raising output in Geel, Belgium, by 220,000 tonnes/year in 2009. Output was also debottlenecked in Grangemouth, UK, by 50,000 tonnes/year and in Lavera, France, by 10,000 tonnes/year. Austrian-headquartered Borealis started up a 330,000 tonne/year unit in Burghausen, Germany, in late 2007. Several new plants in Saudi Arabia and Iran are going online in 2008.

PRICES

European prices have fallen consistently in 2008, and so have margins. Contract prices in early July were €1,250-1,270/tonne for injection moulding, with copolymer at €1,300-1,320/tonne and expected to rise.

Producers are seeking hikes of €100-150/tonne in July, but players were waiting for propylene contracts to settle first, where a steep increase is expected because of the upsurge in crude oil and naphtha.

TECHNOLOGY

The dominant licensed process is Spheripol (LyondellBasell), which combines bulk phase polymerization in tubular loop reactors with gas-phase polymerization. Borealis has adapted its Borstar bimodal polyethylene (PE) process to make PP. Higher activity catalysts have enabled the introduction of gas-phase technology, which operates with lower-purity propylene and at lower costs.

Development work has focused on metallocene catalysts to improve the resins' properties. LyondellBasell has developed a fluid bed, multi-zone circulating reactor called Spherizone that can generate different materials and extend the range of properties.

OUTLOOK

An extra 19m tonnes/year of PP capacity will be added globally by 2012. Half of this total is planned in Asia and 6m tonnes/year will be in the Middle East, which will replace South Korea this year as the world's largest PP exporter.

Global demand is predicted by global consultancy CMAI at just under 6%/year to 2012, with most growth from developing regions such as China and India. In Western Europe, demand will grow at 4%/year and the region will become a net importer by 2009. Central and East European markets will grow faster at 5-7%/year.

Closure of unprofitable operations in Western Europe will continue as producers with uncompetitive costs will be unable to maintain their export positions.

MAJOR EUROPEAN POLYPROPYLENE CAPACITY*, '000 TONNES/YEAR *excludes plants under 100,000 tonnes/year

Company Location Capacity
AOZT Polypropylene Ufa, Russia 100
Basell Orlen Polyolefins Plock, Poland 400
Borealis Antwerp, Belgium 300
Beringen, Belgium 350
Burghausen, Germany 570
Porvoo, Finland 160
Schwechat, Austria 450
Domo Polypropylene Rozenburg, Netherlands 180
Dow Chemical Cologne, Germany 195
Schkopau, Germany 250
Eko Chemicals Thessaloniki, Greece 180
ExxonMobil Lillebonne, France 270
Notre-Dame de Gravenchon, France 170
INEOS Polyolefins Antwerp, Belgium 130
Geel, Belgium 310
Grangemouth, UK 285
Ronningen, Norway 175
Sarralbe, France 280
LiNOS Lisichansk, Ukraine 100
LyondellBasell Industries Berre, France 350
Brindisi, Italy 400
Carrington, UK 210
Ferrara, Italy 185
Knapsack, Germany 250
Tarragona, Spain 360
Terni, Italy 245
Wesseling, Germany 460
Moscow Oil Refinery Moscow, Russia 100
Nizhnekamsk-neftekhim Nizhnekamsk, Russia 180
Petkim Aliaga, Turkey 145
Polychim Dunkirk, France 230
Repsol YPF Puertollano, Spain 120
Tarragona, Spain 390
SABIC Europe Geleen, Netherlands 600
Gelsenkirchen, Germany 500
Slovnaft Bratislava, Slovakia 255
Stavropolpoly-merproduct Budyennovsk, Russia 120
Tiszai VegyiKombinat Tiszaujvaros, Hungary 280
Tomskneftekhim Tomsk, Russia 130
Total Petrochemicals Feluy, Belgium 800
Gonfreville, France 200
Total Petro-chemicals/INEOS Lavera, France 300
Unipetrol Litvinov, Czech Republic 275

SOURCE: ICIS 

Profile last published January 9, 2006

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