Spot US PP prices heard below March PGP contract costs

23 March 2012 16:21  [Source: ICIS news]

PolypropyleneHOUSTON (ICIS)--Spot prices in the US polypropylene (PP) market have been heard at levels below the March contract price for polymer-grade propylene (PGP), sources said on Friday.

Typically, PP prices are between 67 cents/lb ($132154/tonne, €100117/tonne)  higher than monomer. However, buyers and traders described sales of generic prime homopolymer PP at 75 cents/lb and copolymer PP at 77 cents/lb, both of which are below the March PGP contract price of 77.5 cents/lb.

But even with the lower prices, sources said not much material is being moved.

"We are looking at a very wild time right now, to be able to sell product at below monomer and still have to convince people that it is a good deal," said one trader.

Demand remains weak as buyers continue to work off of inventory they built at the end of the fourth quarter of 2011, hoping to keep themselves out of the market in the first quarter of 2012.

"There's not a lot of demand, because 75 cents/lb isn't all that attractive when you loaded in at 64 cents/lb," said one buyer, who bought a few railcars at 75 cents/lb, but has no plans to buy more.

The price movement seems to be at the trader level, not the producer level, according to some market participants.

With sentiment building that monomer has neared its peak price, traders are starting to offer resin they had stockpiled at a lower price, hoping to sell it before prices fall, said a participant in the propylene market.

A PP producer said it was not aware of spot PP being sold below monomer, but did agree that there are indications that prices will fall in April.

($1 = €0.76)

Additional reporting by William Lemos

By: Michelle Klump
+1 713 525 2653

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