During the third week of January 2024, the European Polypropylene (PP) market witnessed a notable surge of 2.6% in prices. This upswing was primarily fuelled by a substantial 23% spike in the price of its feedstock, Propylene, recorded in the preceding week. The surge in Propylene prices led to increased production costs, fostering a bullish pricing sentiment in the European PP market. Tight supplies and heightened replenishment activity among participants further propelled the rise in spot prices. In response, European sellers adjusted their offers downwards in anticipation of better netbacks, contributing to a positive market trajectory. End-users responded to these dynamics by engaging in heightened restocking activities as a precautionary measure to mitigate potential delays in PP deliveries from the Middle East.

Simultaneously, the Saudi Arabian market experienced a surge in the price of PP, rising by approximately 2.5%. This increase was directly influenced by a concurrent 3% rise in the price of feedstock Propylene within the country, elevating overall production costs. Despite these cost pressures, demand for PP remained stable throughout the week. However, escalating tensions in Yemen, particularly concerning the Red Sea, cast a shadow over the market backdrop. Persistent Houthi attacks in the region, including the most intricate series of attacks to date, intensified international trade concerns. The effective military presence led by the United States and the United Kingdom thwarted missiles and drones from reaching their targets. Nevertheless, the situation created a logistical challenge for shippers and exporters, resulting in escalated freight rates, container prices, and insurance costs. This impact was notably deterrent for container vessels, rerouting 70-80% of container traffic, especially among larger carriers, since the previous month.

In contrast, the price of PP in the Mexican market remained stable throughout the third week of January 2024. This stability was influenced by consistent product imports from overseas at previous rates and the rollover of PP prices in the USA. However, domestic demand in Mexico showed relative weakness, with certain sectors, notably manufacturing, experiencing contraction.

The smooth functioning of the supply chain channel is critical for polypropylene production. Disruptions in the production of propane or propylene, the precursors of polypropylene, can have significant implications. Recent reports indicate disruptions in the US Gulf Coast due to a severe winter storm, leading to the shutdown of a Texas refinery and reduced oil production in North Dakota. Freezing in pipelines and storage affected multiple manufacturing units.

During the third week of January 2024, the PP market in Brazil experienced stability in pricing. This stability was attributed to seamless imports arriving from the USA at previously established prices. The consistent influx of imported PP products and relatively balanced demand-supply dynamics reinforced the prevailing price trend in the Brazilian market.