North American Market Uncharacteristics PP Quotes Not Falling

[China Packaging Network News] Recently, the four major polypropylene (PP) markets in Asia, Europe, the Middle East, and Africa have experienced a new round of price fluctuations due to low production capacity and tight supply conditions. However, North American PP prices have taken a different path. In June, PP prices in the region dropped by an average of 3 cents per pound, primarily driven by lower contract prices for propylene monomer.


Local traders noted that North American PP prices have been declining for five consecutive months, with an average drop of 4 cents per pound over the previous four months. In January, prices had risen by 5 cents per pound compared to the previous month, but since then, the market has entered a downward spiral.


“The decline in PP prices in June was somewhat unexpected, as our market demand has improved significantly in recent months,” said a PP supplier. “Compared to the same period last year, North American PP inventories increased by 2% in April, and sales are expected to rise by 5% in May from April’s levels.”


A buyer in the Midwest United States stated that demand for PP in North America remained strong in June, but the sharp drop in propylene monomer prices made them believe that PP prices could continue to fall in July.


Although price trends typically depend on supply and demand, this dynamic has had limited impact on North American PP. For instance, despite a tight supply situation in April, PP prices did not rise but instead fell by 1 percentage point compared to earlier levels.


Industry analyst Scott Newell, a well-known expert in the PP market, explained the unusual trend in North America: “This year’s PP price movement in North America doesn’t follow traditional market rules like other regions. Buyers in the region made advance purchases, disrupting normal transaction patterns. After seeing a positive trend in the second half of last year, some buyers feared that PP prices would rise further in 2014, so they stockpiled supplies before the end of 2013. This led to reduced purchasing power in the first half of this year. Additionally, the oversupply of propylene in upstream raw materials further pressured PP prices. Several large-scale propylene facilities in North America continued operating without scheduled shutdowns or maintenance, resulting in an abundant supply and a sharp drop in propylene monomer prices.”

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