Polypropylene Gains Bearish Momentum in the USA, Stability Persist in Asia and Europe

In the third week of May 2024, concluding on May 17, the price of polypropylene (PP) in the U.S. market decreased by approximately 1%, driven by low demand from overseas markets and ample global supply. On the resin front, few fresh polyethylene and PP railcar offers were available in the spot market. However, there was a notable number of urgent truckloads needs that a short-staffed trading desk managed to fulfil, primarily from market-making inventory. The average price for PP copolymer grade delivered to Houston was USD 1,011/MT over the week. This trend reflects the dynamic interplay of supply and demand, impacting the market prices and availability of PP in the U.S. market.

Following two weeks of stability, the price of PP in the European market remained stable this week due to a balanced gap between demand and supply. The price of feedstock propylene also remained unchanged, contributing to the PP price stability. The market demonstrated resilience in demand, while industry load remained average during this period. Additionally, new overseas queries related to PP were muted, further contributing to the stable trend in the region. However, the freight industry experienced increasing rates between East Asia and Northern Europe since the first half of April 2024, creating additional hurdles for PP exports.

This week, in the Asian market, the price of PP remained stable as the price of feedstock propylene and upstream crude oil remained unchanged. Prices were assessed flat due to muted PP buying sentiments in the region. As per the Energy Information Administration (EIA), U.S. crude oil refineries processed an average of 16.3 million barrels per day in the week ending May 10, 2024, marking an increase of 307 thousand barrels per day compared to the previous week's average. Refineries were operating at 90.4% of their capacity during this period. Gasoline production rose to an average of 9.7 million barrels per day, while distillate fuel production reached 4.8 million barrels per day.

U.S. crude oil imports averaged 6.7 million barrels per day, showing a decrease of 226 thousand barrels per day from the previous week. Over the past four weeks, crude oil imports have averaged approximately 6.7 million barrels per day, representing a 7.1% increase compared to the same period last year. The average daily import of total motor gasoline stood at 726 thousand barrels, while distillate fuel imports averaged 89 thousand barrels per day.

Commercial crude oil inventories in the U.S. declined by 2.5 million barrels from the previous week, amounting to 457.0 million barrels, approximately 4% below the five-year average for this time of year. Motor gasoline inventories experienced a reduction of 0.2 million barrels, placing them approximately 1% below the 5-year average. While finished gasoline inventories saw an increase, blending components inventories decreased. Distillate fuel inventories experienced a slight decrease, standing at about 7% below the five-year average. Propane/propylene inventories witnessed an increase of 2.9 million barrels, reaching 14% above the five-year average. Overall, total commercial petroleum inventories increased by 3.5 million barrels over the week.