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3/20/2014 | 1 MINUTE READ

Polyolefins Expert Foresees "Sunnier" Outlook for PP

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No doubt that PP pricing has been extremely volatile over the last few years in North America, owing largely to structural supply issues of PP’s primary feedstock propylene. But can we expect a change, and if so, when and why? Joel Morales, director, Polyolefins North America at IHS, weighed in on his company’s outlook for the widely-used commodity resin at the Plastics Recycling Conference 2014, held last week in Orlando.

 

For the next couple of years, you can expect PP prices in North America to stay competitive versus other North American produced materials which are also at elevated price levels. In the short term, PP pricing will remain high and relatively volatile, but the situation will begin to improve in the 2016-2017 period as new on-purpose propylene production—which refers to the new plants that will utilize propane dehydrogenation (PDH) technology that comes out of shale gas development—starts to come on stream. IHS, says Morales, is forecasting a reduction in PP price volatility beyond 2015, with PP well positioned to remain an attractive polymer, based on its favorable material properties. Moreover, as North American prices become more aligned with other regions, domestic growth rates should improve.

 

Morales says PP will continue to be one of the highest volume consumption polymers in the world. IHS estimates current annual PP world capacity and consumption at about 68 million m.t. (150 billion lbs) and 56 million m.t. (123 billion lbs), respectively. Growing PP markets include automotive, fibers, BOPP films, raffia, and caps and closures. IHS expects the auto industry’s continued emphasis on light weighting to garner further growth for PP in that market segment.

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Meanwhile, what can PP processors do to best handle price volatility? IHS’s Morales notes that while difficult, processors are improving their ability to pass on price increases to their customers, carefully managing their inventories, and evaluating financial hedging options to manage risk through fixed prices. 

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