Notes From Flexible Packaging Association 2017 Fall Executive Conference

Domestic Demand:   Down 5.3% through August and will not recover by year end.

Producer Domestic Sales:  Through August, sales are up 1.4% per ACC data.  Difference due to decline in 2017 import levels, down 41% through August (IHSM estimate)

PP Production:   Through August is off by 1.5% compared to prior year.

Recent Demand Recovery:   In May/June coupled with multiple supply disruptions led to margin increase announcements for August of 3 cpp. 

Hurricane Harvey Likely To Support Margin:   Near term though structural challenges for the market exist for 2018

• 60% of NAM PP capacity affected by the storm
  

• Expectation of ~300 million pounds of lost September production
  
• All but one plant back up by September 10
  
• Wide spec market peaked up 15 to 20 cpp
  
• ​Imports to increase in Q4
• 3 cent margin enhancement likely….by October 
• Propylene volatility expected to hurt demand post recovery 
• North America’s Price on PP resin closely tied to Asia