The U.S. polypropylene market has a large supply gap

According to industry insiders, the current tight supply of polypropylene (PP) in the United States is unprecedented. No export quotations have been seen this month, and there are few stocks of common specifications and high-quality PP resins.

In recent months, due to a series of planned and unplanned shutdowns and propylene monomer supply problems, the PP operating rate has declined. In addition, some manufacturers actively exported in May and June, which also led to low inventories at the beginning of the third quarter. On August 8, Formosa Petrochemical announced that its PP plant in Point Comfort, Texas had encountered force majeure. Market sources said that in early August, an impact copolymer PP production line had been discontinued. The company has been building inventory for a major set of PP installations to be shut down for maintenance. The overhaul of the device will start in mid-August and will continue until September. Ineos’ PP plant in Carson, California, was suspended due to a power outage on June 30. On July 9, Phillips 66 was also due to power outages at the Linden refinery and PP plant in New Jersey, resulting in an unplanned shutdown of the PP plant.

Leander Basel conducted a planned overhaul of its Lake Charles, Louisiana plant in July. In addition, Braskem will conduct periodic inspections at its Neal, West Virginia and Seadrift plants in Texas at the end of the third quarter or the beginning of the fourth quarter. For those PP suppliers with relatively stable operations recently, customers can get the maximum supply according to the contract allocation. Some suppliers report that the goods have been sold out by September. The demand for PP for packaging applications for medical supplies and consumer goods continued to be strong, and the durable goods manufacturing industry began to pick up after a weak second quarter.

OPIS PetroChem Wire data shows that, as an indicator of market tension, the price of ordinary homopolymer PP in the domestic secondary market in the United States rose by 2 cents/lb, which was 10 cents higher than the lows in late May and early June. lb. The quotations of certain high-melt-liquidity PP have been further increased, and the resale price of ordinary PP has been pushed up to 62~64 cents/lb, which is about 5~10 cents/lb higher than the contract price of the same material. PP producers are seizing the opportunity of tight supply and increasing prices by 3 cents/lb. Most suppliers have previously announced that they will increase their prices by 3 cents/lb starting August 1. Exxon Mobil also announced that it will increase the price of PP by 3 cents per pound from September 1.

There are signs that the current supply relationship will not last until the end of the third quarter. Braskem's new 450,000-ton/year Delta PP production line in La Porte, Texas will start production this month. Traders expect that a large number of products will enter the market at the beginning of production, and a large number of high-quality PP will be put on the market at the end of September or October.