US PP buyers eye further declines after June price cuts

25 June 2010 19:09  [Source: ICIS news]

US PP contracts go downHOUSTON (ICIS news)--US polypropylene (PP) contract prices will likely drop a few cents in July after falling by as much as 8 cents/lb ($176/tonne, €143/tonne) in the previous month, buyers said on Friday.

Most large-volume PP contract business in the US is indexed to the polymer-grade propylene (PGP) benchmark contract price, which tends to settle at the beginning of the contract month.

PGP contract prices fell by 12 cents/lb in May and 8 cents/lb in June. Large-volume PP buyers saw identical price drops in the resin market.

However, PP buyers with negotiated resin contract prices were able to take advantage of aggressive pricing and ample spot availability in May.

Market expectations varied for July propylene and PP, but most forecasts centred on a possible decrease of 3-5 cents/lb.

Recent strengthening in feedstock propylene prices clouded the outlook, however.

June refinery-grade propylene (RGP) traded at 43.00 cents/lb this week. Spot RGP prices were last this high at the end of May before dropping into the upper 30s cents/lb during the first half of June.

Also, a large PP buyer noted on Friday that spot resin availability from a couple of suppliers has lessened this week. The reason for the change in availability was not known.

June US domestic prices for injection-grade homopolymer were 66-70 cents/lb DEL (delivered) in bulk, as assessed by ICIS.

Major US PP producers include INEOS, LyondellBasell, Dow Chemical, Phillips Sumika, Sunoco, Pinnacle, Formosa, Total, ConocoPhillips, ExxonMobil and Flint Hills Resources.

($1 = €0.81)

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