LyondellBasell seeks 2 cent/lb margin bump for US Feb PP

25 January 2012 21:26  [Source: ICIS news]

HOUSTON (ICIS)--US polypropylene (PP) producer LyondellBasell announced a 2-cent/lb ($44/tonne, €34/tonne) price increase for all grades of PP, effective on 1 February, making them at least the second supplier to seek a margin bump, sources said on Wednesday.

The proposed increase, which is identical to one made by Formosa on 19 January, is in addition to any increase in the price of polymer-grade propylene (PGP) contract prices in February, according to a copy of a 25 January 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. The announcements by LyondellBasell and Formosa represent an effort by the companies to increase the base margin, sources said.

Now that two major producers are seeking the increase, some market participants said the initiative could gain some traction. However, several sources remained sceptical that an increase could be pushed through without all producers agreeing to it.

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

By: Michelle Klump
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