Polyethylene & Polypropylene Overview

During the most recent Latin American Petrochemical Association meeting in Cancun, Mexico, ChemPMC shared with participants a quick overview of the polyethylene and polypropylene market situation in the Americas. Here it is, for those of you that were unable to participate in the event.


After peaking in May of this year, polyethylene prices in the Americas have been decreasing for several months now. However, for North American converters, domestic contract prices are still at the highest level they had experienced in almost a decade.

Polyethylene prices

Production costs have also decreased this year. That said, costs have been on an upswing trend since mid 2020, and are as much as 10 cents per pound higher than the cost floor that producers experienced right before the pandemic.  

Polyethylene costs

The resulting combination of lower prices and elevated costs have pushed domestic margins for polyethylene in North America close to the floor level of the last 8 years. Producers will resist allowing domestic margins to continue to drop. The same cannot be said about the spot side of the market, to which Latin American prices are closely related. With additional capacity still coming online, North American exports need to remain competitive. This is expected to result in lower spot prices, and consequently lower spot margins for regional producers.

Polyethylene Margins

North American export prices remain higher than prices in Asia. This puts pressure on producers, that need to find alternative markets to move the excess material that is being produced in the region. Besides Latin America, a natural market for U.S. exports, Europe is also an option for producers.

Polyethylene Prices US Vs Asia

One concerning trend for producers are the declining exports out of the United States. After peaking in May, U.S. polyethylene exports have been in decline. This is taking place at the same time that new capacity (Shell) is starting up in the region.

Polyethylene Exports

One driver for this situation is that the North American spot prices are still much higher than Asian prices. We estimate the North America to Asia spot spread to be around 14 cents per pound. In the case of Europe, the spread is about 1.5 cents per pound, which is closer to the transportation cost across the two regions. 

North America to Asia Polyethylene Price Spread

North American producers have another issue to worry about. The domestic spread to Asia remains quite high, at almost 35 cents per pound. U.S. converters traditionally do not import polyethylene from overseas; however, this level of arbitrage may eventually put pressure on the domestic polyethylene prices in North America. The reduction in logistical costs, which are now at pre-pandemic level, should give producers pause. The fact that North America has not imported polyethylene in the past does not mean that it will not do so in the future.

North America Domestic to Asia Polyethylene Price Spread


Just as it has been the case for polyethylene, polypropylene prices have seen sharp reductions this year. Since in the case of polypropylene there is no excess production in North America that needs to be exported, and the supply and demand balance in the region had been quite tight for a while, domestic contract and spot prices are much more closely aligned. 

Polypropylene Prices

What is different in the case of polypropylene is that costs have decreased significantly this year. In fact, polypropylene cash costs for non-integrated producers are at their lowest level in almost a decade. 

Polypropylene Cash Costs

This means that, for polypropylene producers, margins are still a the high end of the level that the industry experienced in the years prior to the pandemic. This also means that margins have some room to fall before reaching rock bottom.

Polypropylene Margins

Why do we say that margins may fall? Well, first, prices in the region remain much higher than prices in Asia. We estimate the spread between prices in the Americas versus Asia to be as high as 40 cents per pound. Now that, as mentioned earlier, logistical costs are at pre-pandemic levels, an arbitrage opportunity exists for imports into the region. And converters already found ways to import material into the region when prices get out of hand, even in difficult years like 2021.

America to Asia Polypropylene Price Spread

In addition to the potential impact from imports, capacity expansions are another factor that may drive PP prices and margins lower. In Canada, Heartland Polymers started production in July of this year. And, in the U.S., Exxon Mobil is expected to start its new Louisiana plant before the end of the year. We are already seeing Canadian product make its way into North and Latin America. As supply increases and demand is impacted by the current economic environment, prices will be under pressure as well.

Polypropylene Imports USA

In summary: challenges ahead for the polyolefin industry in the Americas. Make sure to subscribe to our blog to get the latest from ChemPMC and other industry thought leaders. And leave us a comment! Your thoughts are much appreciated.

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