US PP June contracts fall 15.5 cents/lb with propylene

07 June 2012 22:11  [Source: ICIS news]

HOUSTON (ICIS)--US polypropylene (PP) contract prices fell by 15.5 cents/lb ($342/tonne, €274/tonne) in June, following an identical drop in feedstock propylene, sources said on Thursday.

US PP contract prices for June were at 63.00-65.00 cents/lb DEL (delivered) for homopolymer injection and raffia grade material, as assessed by ICIS. The price is the lowest the market has seen since November 2009.

Much of the PP market has a monomer-based contract that follows the monthly polymer grade propylene (PGP) cost. PGP prices fell to 52 cents/lb for June.

The price drop is expected to boost demand significantly, as buyers rebuild their inventories and purchase enough material to sustain them for at least three to four months, sources said.

"Everybody that bought heavy back in December and January, they weren't buying for December and January, they were buying for three and four months ahead," said one market participant, who expects buyers to follow the same pattern in June. "But as soon as everyone's silos are full, they are going to go lights out again."

Buyers agreed that they will make significant purchases in June. However, some have said they have pushed some orders to July. With refinery-grade propylene (RGP) for June trading at 36 cents/lb on Thursday, the buyers said they see room for another decrease in July.

"People will still want to buy a little bit in June, but the question is are we actually on the floor?" said one buyer. "My take is we probably aren't quite there yet."

Major North American PP producers include LyondellBasell, ExxonMobil, INEOS, Total, Formosa Plastics, Braskem Americas, Pinnacle Polymers, Phillips 66 and Flint Hills Resources.

($1 = €0.80)

By: Michelle Klump
+1 713 525 2653

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