The global polypropylene market faces three major challenges in the second half of the year

According to Platts Energy Information, analysts said that the mixed market conditions in different regions of the world in the second half of the year are expected to increase the uncertainty of the polypropylene (PP) market
.

The factors supporting PP market prices in the first half of the year included healthy downstream demand and tight global supply, which are expected to continue into the second half of the year, but the beginning of the hurricane season in the United States, the commissioning of new production capacity in Asia and the ongoing logistics problems in Europe may weaken their impact

Uncertainty of the epidemic rises, restraining downstream demand

The outlook for the Asian PP market in the second half of the year is mixed.

The good news is the strong demand in downstream medical and packaging applications, and the worry is the increase in supply, the outbreak of the epidemic again and the continuing problems of the container transportation industry

From June to the end of June, Asia and the Middle East will add 7.

04 million tons/year of PP production capacity, including new production capacity and resumed production capacity, of which China has 4.
3 million tons/year

Sources said that during the global PP shortage earlier this year, Chinese producers proved the feasibility of exporting PP, which helped increase the export channels and market acceptance of price-competitive Chinese PP
.

Although it is not common for China's PP export arbitrage window to remain open for a long time, as the pace of capacity expansion accelerates, Chinese suppliers may continue to look for export opportunities
.

Although demand from medical, sanitation and packaging-related applications continues to be strong, as well as the advancement of vaccination programs and the recovery of some economic sectors will contribute to the growth of PP demand, in Asia, especially India, which is the second largest demand center in Asia After the new outbreak of the epidemic, the downstream demand of PP becomes increasingly uncertain
.

The beginning of the hurricane season, U.

S.
PP prices will remain firm

　　In the second half of the year, the US PP market is expected to face price increases stimulated by key factors such as healthy demand, tight supply and the beginning of the hurricane season
.

U.
S.
PP suppliers have announced a price increase of US$176/ton in June.
In addition, stimulated by the rebound in raw material propylene prices, U.

　　The price of PP in Houston has risen sharply by US$783/ton since January 4, an increase of 53%.

The reason is that extreme weather in mid-February caused many PP production plants to close, which aggravated the already tight supply

　　Analysts said that before the extreme weather in February, the U.

S.

　　Container shortage triggers supply uncertainty in the European market

　　Due to the global shortage of containers restricting Asian imports, the supply of PP in Europe will face unfavorable factors
.

However, after the large-scale vaccination of the new crown vaccine in Europe, new demand may emerge as the restrictions related to the epidemic are lifted and consumption behavior is changed

　　In the first half of the year, under the influence of supply shortage and healthy demand, the price of PP in the European market hit a record high.

The spot price of PP in Northwestern Europe rose by 83%, reaching a peak of 960 Euros (about 3,528.
48 yuan)/ton in April
.
Analysts believe that after the European PP price peaked in the first half of the year, it may be revised downwards in the future
.

　　European PP producers said, "As far as prices are concerned, I think it has peaked, but demand or prices will not fall sharply, and price declines will be more controllable
.
"

　　In the second half of the year, the European PP market needs to solve the global container shortage to balance the market, which has led to delays in the supply chain and additional logistics costs in the first half of the year
.

　　Both PP producers and processors will use the traditional summer off-season to increase PP inventories and prepare for the expected rebound in demand in the second half of the year
.

　　The relaxation of epidemic blockade restrictions in Europe is expected to inject new PP demand into the service sector, while PP demand in the packaging sector will continue to maintain the strong momentum during the strict control of the epidemic
.
However, in view of the uncertainty of the extent of the recovery of European car sales, the outlook for PP demand in the automotive industry is still unclear
.
(Zhang Chunxiao)

　　Transfer from: China Petrochemical News