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Prospects For PP Market In North America
- Dec 29, 2018 -

According to IHS Markit's latest Monthly Market Report on North American Polypropylene, although imports account for a considerable share of the North American polypropylene (PP) market this year, as propylene supply increases and prices fall in the region, local PP producers will increase production to recover some losses soon.

Market participants said that with the improvement of propylene raw material supply, lower raw material prices, and continuous growth of market demand, North American PP producers will gradually regain their market share in the future. IHS Markit believes that although imported PP resin will continue to exert market share pressure on local producers in North America by the end of 2018, after 2019, with the improvement of local propylene supply, the production of PP resin will increase significantly and replace imports substantially.

Looking at the North American PP market in 2018, it can be described as ups and downs. Demand for PP in North America has remained strong. According to IHS Markit, sales of PP in North America reached 13.3 billion pounds (about 6 million tons) in September 2018, up 3.8% year-on-year. However, in the second quarter, due to the abnormally tight supply of propylene, local PP prices soared. In this context, more cost-effective overseas PP products entered the market in large quantities. Field. Since then, planned and unplanned shutdowns at local PP factories have led to further reductions in supply, resulting in continued entry of overseas products into the North American market. As of September, imports of PP in North America increased by 48% year-on-year to 1.1 billion pounds (about 500,000 tons). During the same period, PP production in North America was 12.5 billion pounds (about 5.67 million tons), down 2.2% from a year earlier.

IHS Markit predicts that by the end of this year, PP production in North America will be 500 million pounds (230,000 tons) less than in 2017, or 3% less than a year ago. However, the situation of PP producers is improving during this period. Propylene supply in North America is expected to return to normal by 2019 as the proportion of LPG raw materials used in ethylene cracking units increases.

At the same time, the increase of propylene supply in North American market also caused its price to drop sharply, and the price of PP also fell. The average spot price of polypropylene in November was 47.31 cents/pound, down 20% from the peak level of 59.38 cents/pound in August; the average spot price of homopolymer PP resin was 62.50 cents/pound, down 11.5 cents/pound from 74.00 cents/pound in October, down 15%. The base contract price of PP was 81 cents/pound, down 11% from 91 cents/pound in October, the biggest monthly decline since January 2015.

On the other hand, PP inventory is also recovering rapidly. IHS Markit has learned from several suppliers that due to the cooling of market demand, it is expected to rebuild inventories faster than expected in November.