AFPM ’17: Jumping PP prices raise question of imports

25 March 2017 19:28 Source:ICIS News

SAN ANTONIO (ICIS)--A persistent question floated by US polypropylene (PP) watchers heading into this weekend’s International Petrochemical Conference (IPC) in San Antonio, Texas is about when imports will start arriving.

After all, the expected increase of 3-4 cents/lb ($66-88/tonne) in March PP contracts will, when combined with hikes in January and February, have raised the polymer’s prices by almost 40% this year.

US PP prices are now among the highest in the world, which is where American prices were in late 2015 and early 2016 when an influx of imports last came ashore.

The latest data available shows imports still sinking back to historic levels and slightly under 2016 lows.

Some sources say this is not the year for imports, even if prices are high. A distributor described the dilemma as a mainly a matter of the time it takes to ship material from Asia or the Middle East, which sourced a lot of the imports last year.

The distributor said it will easily take a month or maybe two months for the material to arrive, and few buyers want to bet right now that propylene prices will keep rising. PP has followed propylene in each of the past eight months, and propylene prices have increased this year as supply has dropped.

However, propylene supply has increased by about 3% over the past two weeks.

“Most people think supply will really improve here [the US] in the next month,” the distributor said.

Others say the imports never stopped, though the influx did tail off.

“I hear of some imports but not near the volumes we saw last year,” a longtime PP watcher said.

Another source said customers who ordered foreign material last year now have the advantage of knowing how to do it.

That source said the wise purchase manager should import a certain if not small amount of PP every month no matter what the price, “just to keep his options open”.

Major producers in the US include Braskem, ExxonMobil, Flint Hills Resources, Formosa Plastics, Indelpro, INEOS, LyondellBasell, Phillips 66, Pinnacle Polymers, Sasol and Total Petrochemicals.

Sponsored by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC runs 26-28 March in San Antonio.

By Lane Kelley