As of March of 2022, polypropylene resin pricing is heading higher over the next few months. These higher prices are reflective of several market forces at play. First, polypropylene demand is strengthening. Domestic sales of polypropylene resin were up 10.7% in February 2022. Domestic demand has increased for three straight months, and industry days of sales in inventory have dropped from almost 40 days of supply in the 4th quarter of 2021 to nearly 35 days of supply at the end of February. As a result, demand for polypropylene resin should continue to be strong for at least the next three months.
From the supply side of polypropylene, continued oil prices of over $100 per barrel have refinery-based heavy feedstocks at a significant cost disadvantage. As such, polymer-grade propylene (PGP) producers who can alternate between feedstocks have switched over to maximum ethane purchases to produce propylene monomer. While ethane is currently cost-advantaged, it has a very low yield and is constraining the output of PGP which is the building block for polypropylene. The price of PGP increased 6 cents per pound in February and is forecasted to increase by another 15 to 20 cents per pound in March and April 2022. This increase will directly affect the price of polypropylene resin.
At Belton Industries, Inc., we are taking steps to reduce the effect of higher prices by buying early and keeping adequate inventories of polypropylene resin so that we are sufficiently supplied in the event the polypropylene resin industry suffers from shortages and force majeure clauses are put into effect.
Belton Industries, Inc. was founded in 1916 and has been a producer of yarns and woven fabrics made of polypropylene for over 40 years. Our size, continuity of management, flexibility, and experience are the hallmarks of our longstanding customer relationships. For more information, please contact us or visit our website.