Polypropylene prices increase by 8¢/lb
Outlook is unclear and future prices could slip
Tom Stundza -- Purchasing, 7/1/2009 2:24:04 PM
Buyers will be paying 8¢/lb more for polypropylene early this month as rising monomer and energy costs have pushed spot homopolymer-grade resins to 54¢ despite weak demand. Supplier sources say resin prices could increase further later in July or August by as much as 3¢/lb, but buyers say slippage back to 50¢ is possible if purchasing continues to soften.
"The volume and prices of chemicals and such resins as polypropylene and polyethylene definitely are down from the highs of last August," says the director of purchasing at a manufacturing firm in Indiana. Last August, polypropylene's spot price average was 89¢/lb, then fell to a nadir of 40¢ in February before starting to rebound due to tightened supply.
ICISpricing.com says tight propylene supplies have resulted from a huge disparity in the
price of crude oil and natural gas, and such natural gas liquids as propane and ethane. This has limited propylene monomer production as crackers favor the light feedstock ethane to make ethylene, leaving supplies of propylene inadequate in the market. Lately, though, crackers have begun working to add propylene supply--and prices of the monomer have begun to slip.
Market analysts suggest that buyers keep an eye on the spot propylene monomer market as a guide to polypropylene resin pricing. Analyst Kevin W. McCarthy at Bank of America/Merrill Lynch Research says demand for such basic polymers as polyethylene, polypropylene and polystyrene isn't expected to rise until the second half of this year. Producers of resins cite buyer reluctance amid the economic downturn so far this year, but they still express optimism that demand will increase slightly in 2010.
See also: Propylene and polypropylene prices see slight rebound on tight supply.
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