US and Asia PP Prices Rise Amidst Rising Demand and Freight Charges

In the USA, the price of polypropylene (PP) surged by approximately 10% during the week ending on May 31, 2024, driven by increased domestic and overseas demand following a long period of stability in the global market. This surge in PP price was partly influenced by a significant rise in Ford’s U.S. new vehicle sales, which grew by more than 11% in May compared to the same month last year, with strong sales growth in all-electric and hybrid models. In Europe, new car registrations in the European Union increased by 6.6% in the first four months of the year, reaching nearly 3.7 million units. Notably, Germany and Spain saw a 7.8% increase each, followed by France with 7% and Italy with 6.1%.

Meanwhile, the Chinese PP market also experienced bullish sentiments this week, with a 1.8% weekly increase. High international crude oil continues to support the PP market, despite fluctuating and consolidating propylene prices. Decreased domestic port inventories of propane have led to slight price increases, maintaining acceptable cost support for PP in the near term. Pre-holiday PP markets in China remained cautiously firm, supported by intensive maintenance turnarounds and high costs. As market activities resume post-Labor Day holiday, expectations are mixed due to potential weaker supply-demand dynamics and cost support.

The polyolefin markets are supported by reducing supply amid the turnaround season, with combined polyolefin levels of major local producers at 720,000 tons on April 30, down by 75,000 tons from the previous week. However, concerns over ample availability persist due to low offtake of polymer materials. Post-holiday, substantial inventory accumulation and increased utilization rates are anticipated, raising supply pressure. While demand for PP is not expected to improve significantly in the short term, the state of demand varies across sectors. Large-scale product company orders remain relatively stable, but small and medium-sized companies face financial pressures due to difficulties in securing orders. The pipe industry continues to experience sales pressure from the real estate cycle, whereas robust demand for copolymers is driven by the rising sales of electric vehicles and the plastic woven products segment.

According to ChemAnalyst, the price of PP may stabilize in the coming weeks due to the anticipated normalization of freight rates. In May 2024, the global freight industry saw a substantial surge, with the global container freight index rising by over 30%. However, it is anticipated that freight rates may normalize during the first half of June, which could affect PP prices.