American Polypropylene (PP) Prices fall, high Availability and Lower Freight Rates helped

During the first half of March 2024, the US market witnessed a decline in the price of Polypropylene (PP) by approximately 2%. This reduction coincided with a 1.2% decrease in the price of feedstock Propylene Polymer grade over the same period. The downward trend in prices was largely attributed to the easing of supply constraints following the normalization of the Red Sea crises and a subsequent decrease in freight rates within the global freight industry. This led to improved availability of essential raw materials and products, with no observed scarcity during this period. However, demand for PP both domestically and overseas remained sluggish.

Additionally, container spot rates from Asia to the United States experienced a seasonal dip, indicating apparent market strength as carriers expanded capacity and major US retailers prolonged annual service contract negotiations. Despite the typical post-Lunar New Year decline in spot rates, this year's rates remained significantly higher compared to the previous year, indicating a sustained level of market activity especially in chemical sector including PP.

Earlier in the year, disruptions in international sea freight caused by the Red Sea crisis had driven container rates to their highest levels in nearly eighteen months which was directly impacted the price of PP. However, recent data suggests that the peak of PP price increases has passed, with a notable decrease in rate fluctuations compared to earlier months.

As of March 14, 2024, the global WCI index stood at around USD 3,162 for a 40-foot container, representing a 4% decrease from the previous week. This decline in freight rates has positively impacted trading conditions for PP in the North American region, resulting in a 2% decline in prices by the week ending March 15, 2024.

In recent developments, the Port of Prince Rupert has announced plans to expand its operations amidst declining volumes, signalling efforts to adapt to changing market conditions. The expansion plans announced by the Port of Prince Rupert amid declining volumes can significantly impact the trading of PP in the global market. With expanded operations at the Port of Prince Rupert, there will likely be improvements in logistics infrastructure and efficiency. This could lead to smoother and more reliable transportation of PP and its raw materials, reducing transit times and costs for traders. The expansion of the port suggests an increase in handling capacity. This means that larger volumes of PP can be accommodated, facilitating larger shipments and potentially driving down shipping costs per unit, which can be advantageous for traders looking to buy or sell PP in bulk. The Port of Prince Rupert's strategic location on the west coast of Canada provides convenient access to major markets in Asia and the United States. This proximity can make it an attractive hub for PP trading activities, especially for traders looking to capitalize on trans-Pacific trade routes. The port's proactive approach to expanding operations despite declining volumes indicates a readiness to adapt to changing market conditions. This flexibility can help ensure that the port remains competitive and capable of meeting the evolving needs of PP traders in the face of fluctuating demand and supply patterns.

According to ChemAnalyst, the price of PP projected to decrease in the upcoming weeks due to several factors, including ample availability, a robust supply chain, and cheaper raw materials attributed to declining freight rates. However, amidst this favourable outlook, there is a prevailing sentiment among shipping companies and shippers utilizing their services that the recent weeks and potentially the forthcoming ones represent the 'quiet before the storm.' This phrase alludes to a period of apparent calm or stability before an impending period of turbulence or significant change in the market, where rates are expected to adjust downwards.