The global polypropylene market has shown signs of shifting away from a balanced market into one of supply tightness, LyondellBasell CEO Bob Patel said Friday.
Demand has been growing, and no capacity expansions have been planned for the near future, Patel said in a conference call to discuss third-quarter results. The growing demand and static capacity has the market heading toward tightness.
“Polypropylene has been underinvested for years, in the US and Europe especially,” Patel said.
LyondellBasell saw improved margins on polypropylene in the third quarter, increasing about 4 cents/lb in the Americas and about 2 cents/lb in Europe and Asia, the company said.
Polypropylene margins in the Americas exceeded 15 cents/lb in the third quarter and approached 20 cents/lb, according to material presented during the call. Polypropylene margins in Europe stood above 8 cents for the quarter.
The company saw stronger volumes in Europe with 1.673 billion lb sold in the third quarter, up 9.4% from 1.529 billion lb in the second quarter and 2.4% from the 1.633 billion lb in the third quarter of 2014.
Volumes in the Americas decreased with the company facing production challenges. Q3 polypropylene sales volumes reached 662 million lb, down 5.1% from 698 million lb in the second quarter and 2.7% from 681 million lb from the third quarter of 2014.
LyondellBasell remains under force majeure on polypropylene out of the Bayport Polymers facility in Pasadena, Texas, after a sitewide power outage earlier this month, the company said.
In mid-June, the company declared a supply allocation for polypropylene out of the Bayport plant and from Lake Charles, Louisiana, citing planned and unplanned production outages at the facilities, according to a company letter.
The allocation was in effect through September and restricted polypropylene orders on a monthly basis to a percentage of prior average purchases, the letter said.
