A major price hike has hit the North American polypropylene market, sending prices up an average of 15 cents per pound since Jan. 1.
The January move is the eighth double-digit price swing to hit the North American PP market since January 2011. Increased volatility has been a concern of both buyers and producers of the material.
The recent increase again was tied in to a major fluctuation in the price of propylene monomer feedstock. Propylene supplies have grown tight because of a number of planed and unplanned outages in production throughout the U.S. Gulf Coast, including a lengthy shutdown at a plant operated by Petrologistics LLC in the Houston area.
Ethane at the Mont Belvieu, Texas trading hub, a traditional pricing benchmark, sold for 28.4 cents per gallon Tuesday, down from a peak average of 89 cents in October, according to Platts research. Propane at Mont Belvieu sold for 79.65 cents per gallon, down from $1.47 a gallon in October.
The weak prices, which may last for several years due to a mismatch between supply and demand according to many market observers, could provide an unexpected hit to earnings and cash flow for many exploration and production companies.
Global petrochemical prices fell by 11% in May, their biggest month-on-month drop since November 2008, when the worldwide economic crisis became an accepted and painful reality.
Prices in the $3-trillion-plus global petrochemicals market averaged $1279/tonne in May, plummeting by $165/tonne according to the Platts Global Petrochemical Index (PGPI), a benchmark basket of seven widely used petrochemicals.
U.S. prices for the chemical building block ethylene reached a seven-month low in May, dropping below 50 cents per pound, according to PetroChem Wire, a daily newsletter serving the petrochemical industry.
Reduced ethylene production due to plant maintenance closures supported the ethylene market earlier in the second quarter. Ethylene peaked at just over 75 cents per pound at the beginning of April. On May 31 it traded at 46.5 cents per pound.
U.S. prices for ethylene, the building block chemical for products ranging from plastic bags to antifreeze, recently reached levels not seen since the 2005 hurricane season, according to PetroChem Wire, a daily newsletter serving the petrochemical industry.
Ethylene touched 75.125 cents per pound on April 4, the highest level in at least seven years, PetroChem Wire reported. Prices began 2012 at 56.75 cents per pound. Ethylene climbed as unplanned plant outages and scheduled maintenance caused supply to fall short of demand.