In the third week of January 2024, the global Polypropylene (PP) market faced challenges with a 0.5% price increase due to surge in feedstock Propylene costs. European PP prices surged 2.6% amid a spike in Propylene prices, while Saudi Arabia also experienced an increase in prices of PP. The Chinese PP market saw a notable price rise driven by consistent overseas demand and Red Sea disruptions doubling ocean freight rates.

Throughout the third week of January 2024, the US PP market experienced a modest 0.5% increase in prices, closely linked to a significant 5.5% surge in feedstock Propylene costs. Trading activities showed improvement with buyers exhibiting a preference for truckloads over railcars. Despite this, prices continued their upward trend, influenced by the movement of Polymer Grade Propylene costs. The market witnessed the availability of prime railcars but faced higher asking prices, leading to a degree of market hesitation. Off grade railcars were present, yet technical specifications failed to generate significant interest. Cautious resellers contributed to limited availability of ready-to-ship packaged material, tightening the market further. Producers strategically held onto inventory, intensifying the overall market constraint. The production-constrained Polymer Grade Propylene added to sustained cost-push increases, and with first-quarter turnarounds and impending weather events, the market remains in a state of flux.

In the European market, PP prices surged by 2.6% in the current week, driven by a substantial 23% spike in Propylene prices during the preceding week. This surge elevated production costs, creating a bullish pricing sentiment. PP Spot prices saw an upward trajectory, stimulated by tight supplies and increased replenishment activity. Lower offers decreased, prompting European sellers to explore trade opportunities in export markets. End-users responded with heightened restocking activities, acting as a precautionary measure to mitigate the risk of potential PP delivery delays from the Middle East.

Saudi Arabia witnessed a 2.5% increase in PP prices, influenced by a concurrent 3% rise in Propylene prices, elevating overall production costs. Despite cost pressures, demand for PP remained stable. However, the market was overshadowed by escalating tensions in Yemen, particularly in the Red Sea, leading to logistical challenges and escalating freight rates, container prices, and insurance costs. Houthi attacks persisted, prompting a rerouting of 70-80% of container traffic, creating disruptions in the supply chain.

In this week, the Chinese PP market saw a notable increase in prices, rising approximately USD 5 per metric ton. Consistent demand from overseas markets contributed to the positive trend, while domestic demand for PP was average. However, significant plant shutdowns of PP by key players in China added complexity to market conditions. Ongoing turmoil in the Red Sea, marked by persistent attacks from Houthi rebels, led to substantial disruptions in the critical shipping route through the Suez Canal, causing delays and increased expenses for goods traveling from Asia to the Middle East and Europe. Over the past four weeks, these disruptions have doubled ocean freight rates, posing challenges to a smooth economic recovery in the new year.