The direction of polypropylene development in the United States depends on propylene

Traders say that if the raw acrylic market continues to decline in early 2019, it could allow the U.S. polypropylene to compete again with the rest of the world.
U.S. polypropylene prices are among the highest in the world for much of 2018. Because alternatives to PP in other regions, such as Europe and Asia, are more competitive, it is difficult for U.S. producers to shift PP exports outside typical regions such as Latin America
to
. The high price of polypropylene in the United States is mainly due to global market constraints and strong prices for propylene raw materials in the United States, especially in the first half of 2018, when polymer-grade propylene prices peaked.
propylene prices are expected to fall even more in the first quarter
U.S. injection-grade PP spot FAS Houston exports rose to a high of 77.52 cents per pound ($1,709 a tonne) in January, according to Platts Energy. By early August, the spot price of polymer-grade propylene had fallen to a low of 60 cents a pound due to propane dehydrogenation problems, while the SPOT price of the US PP peaked at $1,720 a tonne.
the fourth quarter of 2018, as PDH units began to function normally, domestic inventory levels in the United States rebounded, and aggregate-grade acrylic spot and contract prices began to decline, leading to a decline in PP prices.
, however, interest in U.S. PP exports did not show up until December 2018, as polymer-grade propylene fell to an annual low of 36.75 cents per pound. Industry insiders say interest in the U.S. PP rekindled in December, partly because of lower raw material costs and partly because some producers want to sell raw materials by the December 31 deadline. Due to the low price of polymer grade propylene, the PP market discussion reduced its price to an annual low of $1.147/tonne at the end of December.
U.S. PP price remains the world's highest by 2019
does not expect major PDH production problems in early 2019, PP market sources said, with a chance that PP prices will fall. In 2018, the U.S. PP spot price for FAS Houston averaged $1,520 a tonne, up from $1,221 a tonne in 2017. By comparison, the average spot price for injection-grade PP in Asia in 2018 is $1,201/tonne in the CFR Far East, while the average spot price of PP-grade PP in Europe is $1,370/tonne in western and northern Europe.
at the same time, the premium of the U.S. domestic PP contract to the polymer-grade propylene contract remains at 18 cents for injection-molded grade polymers and 20 cents for fiber-grade polymers on the basis of tram delivery. Overall, the price of polymer-grade propylene contracts is still falling, from 61 cents per pound in August to 42 cents per pound at the end of December.
regardless of how the propylene market performs in early 2019, some U.S. PP market participants believe the market may have bottomed out in December and domestic spot prices could pick up again in January and February.
U.S. export spot business was limited, despite the fall in PP prices in December. Market participants said in the second half of 2018 that U.S. PP exports may not resume until mid-2019. As a result, trading activity in the U.S. PP market is likely to be limited to domestic distribution markets for most of the first half of 2019.
High U.S. PP prices could lead to continued imports in 2019
since U.S. PP prices are among the highest in the world and global price differences open the door to more imports in the second half of 2018, which trade participants say could continue into 2019. According to the U.S. International Trade Commission, total U.S. PP imports so far this year were 465,741 tons in the year to October 2018, up 18.9 percent from a year earlier and in line with market expectations for the first half of 2018. Most of these imports come from South Korea. In October 2018, U.S. imports of PP from South Korea hit a full-year high of 15,973 tons.
as U.S. domestic production continues to decline for the rest of 2018, imports will follow. As of November 2018, domestic production in North America was down 2.7 percent from the same period in 2017, according to the American Chemical Council. Domestic inventories are picking up, despite a slight drop in production. From June to November 2018, U.S. domestic inventories were higher than in the same period in 2017, according to ACC data. PP inventory in November 2018 was 1634 billion pounds, up 7.1 percent from 1526 billion pounds in November 2017.