Polypropylene in North America has struggled through a very difficult business environment over much of the past decade. Demand is down 15.5% from its peak years, yet industry operating rates are pushing 89% due to capacity rationalization. Polypropylene prices in North America are the highest and most volatile in the world. This all stems from the Shale Gas Revolution and the resulting loss of feedstock (propylene) supply.
2015 will bring solutions and challenges. Investment in on-purpose propylene supply will arrive in the second half of the year. This will help to lower prices, reduce volatility, and allow for growth. However, a lack of investment in polypropylene will result in increasing operating rates and margin expansion. Supply of polypropylene will continue to be short. These market conditions will require constant attention and real-time market intelligence.
Does your business need to re-evaluate its resin strategy? How much margin expansion are your prices seeing and how does it compare with the rest of the industry? Is your business aligned with the right suppliers? Are best-in-class price levels changing? Should you be considering imports? Answers to these questions will directly impact the success of your business. RTi can be a valuable resource to help your business manage its way through this “New Era” in polypropylene.