Grupa Azoty Announces to Start Polypropylene Production at Polimery Police in Poland

The Grupa Azoty, a leader in Poland's domestic fertilizer and chemical market, recently launched Polypropylene (PP) production at Polimery Police, – the largest Polypropylene and Propylene plant in Central and Eastern Europe. The start of Polypropylene production at Polimery Police significantly strengthens Grupa Azoty's position in the European plastics market, and Poland will thus join the group of leaders in producing this Polypropylene in Europe.

The production of Polypropylene carried out in Western Pomerania may serve as an excellent base for the further development of the Polish industry and will stimulate the growth of related industries, particularly those associated with plastics processing. The strategic importance of Police polymers for the Polish industry cannot be overstated. It significantly enhances domestic production capacity in the plastics sector, reducing Poland's trade deficit in this area. This production may strengthen the supply of Polypropylene in the European market and may lead to decreased prices.

Additionally, the Marine Gas Terminal, of European significance, enhances Poland's energy and raw material independence. The location of the investment in Police facilitates the supply of raw materials, such as propane and ethylene, by sea, providing Grupa Azoty with flexibility in sourcing supplies from various parts of the world. This flexibility is particularly crucial in light of recent geopolitical developments and the resulting changes in the direction of raw material supplies.

The Polimery Police complex encompasses the Marine Gas Terminal, which includes a gas reloading and storage terminal. This terminal ensures the capability to deliver propane and ethylene, essential raw materials for production, via sea transport. The LNG terminal is a pivotal component of the Polimery Police project, expanding the commercial offer with the utilization of maritime transportation not only for the companies within the Capital Group but also for external entities in the long run.

The European Polypropylene market faced a downturn in May 2023, witnessing a 3% price decline. The market sentiment turned bearish due to weak macroeconomic conditions, reducing demand across major automotive, construction, and infrastructure industries. This decline in demand, in turn, harmed prices. Additionally, the price of feedstock Propylene contracts experienced a sharp decline in May 2023; the price of Propylene decreased by around 12% in the European market, further contributing to the pricing pressure. The market was also plagued by an oversupply, exacerbated by increased import cargoes. This excess supply continued to exert downward pressure on prices.

Moreover, Polypropylene market participants noted that any planned or unplanned shutdowns at production plants would have minimal effect on the buying momentum as supplies remained abundant in the region. Producers faced persistent challenges to reduce their inventories, while buyers adopted a cautious approach, refraining from making bulk purchases and opting for need-based procurement instead. The market outlook remained uncertain, with participants expressing differing opinions about its future direction. However, there was a consensus that the overall outlook would remain gloomy in the short to medium term. Polypropylene Market players were cautious and adopted a wait-and-watch approach, anticipating further developments that could impact market dynamics.

According to ChemAnalyst, the price of Polypropylene may decrease in the first half of July 2023 due to the strong supply of products in the European market as the Grupa Azoty new Polypropylene facility may strengthen the supply and may meet the domestic as well as international demand for the product.