[Plastic] Three major polypropylene production areas will face challenges in 2021

The three major global polypropylene production regions , Asia, the United States and Europe , are facing obvious challenges in 2021.

Market participants are paying close attention to shipping, production and vaccine-related developments.

New projects in Asia started, with sufficient supply

Participants in the Asian polypropylene market hold a bearish view.

It is expected that from the end of 2020 to the first half of 2021, Asia and the Middle East will add 5.

This does not include the three Chinese PP plants (a total of 1.

Nevertheless, some sources said that the impact of supply expansion on the Asian PP market in the first half of 2021 will depend on the actual progress of these projects.

However, sources said that the supply tensions in Southeast Asia and India in November should be eased by 2021.

The demand for PP in Asia depends on the evolution of the epidemic, vaccination plans and economic recovery.

S&P Global Platts Analytics predicts that as the application of vaccines and other health measures in the fight against the new crown epidemic begins to emerge, PP demand in Asia will rebound by 6% in 2021 after falling in 2020.

Even if the vaccine is delayed, the auto industry in some regions is expected to improve, as people are expected to use personal vehicles rather than public transportation after the epidemic.

In addition, limited container supply and high freight costs may support Asian PP in early 2021.

The U.

After the United States has experienced a turbulent 2020 resin supply shortage, domestic and export PP resins will face supply uncertainty in 2021.

At the same time, in the face of continued strong demand, Blasco's US branch established a new 450,000-ton/year PP plant in Laporte, Texas, which was put into operation on September 10.

Driven by the medical and health departments, throughout 2020, strong domestic demand in the United States will continue to tighten fiber-grade and injection-grade grades, and this situation is expected to continue in early 2021.

However, participants in the export market have abandoned the higher-priced U.

Although prices have remained strong for most of the second half of 2020, and spot prices have caught up with contract levels, such pricing is considered "unworkable" from the United States to traditional import regions including Latin America.
.

According to S&P Global Platts data, from May 15 to December 15, the export price of spot homopolymer PP rose by US$573 from the 2020 low of US$739/ton FAS Houston, an increase of about 78%.

In addition, the shortage of containers, the congestion of US ports and the increase in freight volume to the Americas will pose challenges for market participants.

Europe hopes economic recovery will last

The second wave of the new crown epidemic is likely to continue to affect European PP demand in early 2021, although market participants expect that demand will improve with the end of restrictions in various countries.

The level of PP consumption in Europe in 2021 will largely depend on the success of the vaccination program.
Supported by strong demand for health and medical applications, demand throughout the first half of the year is expected to improve, while processors believe that demand in the food packaging sector remains stable.

In the second half of 2020, the auto industry experienced a stronger-than-expected recovery supported by potential demand.
In 2021, the consumption of PP grades for automotive and construction applications should improve, but the impact of the European economic recession continues to deepen, still posing a threat to car sales and the development of new construction projects, which may limit the extent of recovery .

In the last few months of 2020, as sellers considered that the net rebates offered were more attractive, they sought to supply the export market instead of the European spot market, and the supply of some PP grades was tightened.
Some planned shutdowns and maintenance were postponed from the beginning of the year to the fourth quarter of 2020, which also reduced market supply.

Participants expect that PP cargo will continue to flow to export destinations in early 2021, which may limit spot supply and prompt some European buyers to consider increasing the number of contracts in 2021.

(Keyword: polypropylene production area)