US Feb PP may fall on soft demand, monomer drop

21 February 2008 21:18  [Source: ICIS news]

HOUSTON (ICIS news)--US polypropylene (PP) prices were expected to drop in February on slow demand and a dip in monomer values, resin buyers said on Thursday.

PP market sources were uncertain about the amount of the February decrease as some resin manufacturers were still negotiating the month’s polymer-grade propylene (PGP) contract in hopes of achieving price relief in excess of the initial 2 cents/lb ($44/tonne or €30/tonne) downward settlement.

PP buyers said February resin prices were likely to fall by 2.0-3.5 cents/lb. Producers were not immediately available to comment.

Domestic injection-grade PP prices were assessed at 76.50-81.00 cents/lb delivered in bulk, according to global chemical market intelligence service ICIS pricing.

Further declines through the propylene chain were forecast for March, PP buyers said, but this week’s high crude oil prices and volatility were clouding the outlook.

PP producers have indicated that demand in the first half of February was slow, buyers said. Downward price momentum in the propylene chain has caused buyers to move cautiously and minimise inventories, while broader economic concerns also weighed on sentiment.

The automotive sector was singled out as an especially sluggish end-market.

So far this month, activity in the secondary market has been steady, with no clear signs of suppliers trying to dump excess inventory. Market participants said PP producers typically wait until the last week of the month to clear out excess inventory on the secondary market.

PP export prices have held steady this month, but traders said a 1-2 cent/lb decrease was possible.

Major US PP suppliers include LyondellBasell, ExxonMobil, INEOS, Dow Chemical and Sunoco.

($1 = €0.68)

For more on polypropylene visit ICIS chemical intelligence

 

 

 

By: David Barry
+1 713 525 2653

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