HOUSTON (ICIS)--US exporters of polypropylene (PP) are experiencing some logistics delays as bagging facilities along the US Gulf are operating at close to full capacity.
Material sold domestically is shipped in bulk railcars, which also service export buyers in the Mexican and Canadian markets.
For exports outside the North American region, material must be sent to the US Gulf Coast to be packaged and bagged. Export cargoes are typically sold in 25kg bags packed onto container ships.
Bagging facilities along the Gulf Coast are experiencing delays as they are struggling to keep up with the large new volumes of polyethylene (PE) being exported from the Gulf Coast region.
Bagging facilities and warehouses therefore have limited capacity to deal in PP exports as PE exporters do much larger volumes of business with packagers.
The US PP market is well supplied, and there is incentive to place additional volumes in export channels to relieve domestic supply length.
Export product is readily available in railcars but bagged material for prompt shipment is in short supply as an export cargo purchased in a bulk railcar is likely to face a two-to-three week delay prior to bagging.
Export PP prices are facing some downward pressure as the current offer levels are considered too high to take advantage of international arbitrage opportunities.
August propylene contracts settled at a rollover, which may limit any upward momentum in PP prices.
US PP cargoes are frequently priced on a monomer plus basis.
ICIS assessed bagged export cargoes for US PP raffia and injection at 46-49 cents/lb ($1,014-1,080/tonne) free on board (FOB) US Gulf as of the week ending 23 August.
PP is used for packaging, ropes, carpets, plastic parts, loudspeakers and automotive parts.
Major US PP producers include Braskem, ExxonMobil, Formosa, INEOS, LyondellBasell, Phillips 66 and Total Petrochemicals.
Image above shows a bottle made of polypropylene, the main end market for propylene. Source: PhotoAlto/REX/Shutterstock