20 January 2012 18:32 [Source: ICIS news]
HOUSTON (ICIS)--US polypropylene (PP) producer Formosa Plastics announced a 2 cent/lb ($44/tonne, €34/tonne) price increase for all grades of PP effective on 1 February, sources said on Friday.
The proposed increase is in addition to any increase in the price of polymer-grade propylene (PGP) contract prices in February, according to a copy of a 19 January customer letter obtained by ICIS.
Much of the PP market has a monomer-based contract that follows the monthly PGP cost. In recent years, there has been a set margin for PP, with PP prices changing according to any fluctuation in the price of PGP. Formosa's announcement represents an effort by the company to increase the base margin, sources said.
While producers agree the health of the PP market would improve with higher margins, sources said it will be difficult to implement a margin bump without industry-wide support from other producers.
"I haven't seen anybody else talk about it," said one buyer, who added that it would be difficult for Formosa to achieve such an increase.
Another market participant said similar efforts in the past have failed when they resulted in lost orders.
US PP contract prices for January were at 67-69 cents/lb DEL (delivered) for homopolymer injection and raffia grade material, as assessed by ICIS.
($1 = €0.77)
For more on PP visit ICIS chemical intelligence
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