US PP July contracts settle flat with propylene

13 July 2012 16:35  [Source: ICIS news]

PolypropyleneHOUSTON (ICIS)--US polypropylene (PP) contracts settled flat in July following a rollover for feedstock propylene, despite efforts by some producers to boost their margins by 1 cent/lb for the month, sources said on Friday.

US PP contract prices for July were at 63.00-65.00 cents/lb ($1,389-1,433/tonne, €1,139-1,175/tonne) DEL (delivered) for homopolymer injection and raffia grade material, as assessed by ICIS.

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

Some producers, including INEOS and LyondellBasell, issued notices to customers informing them they would increase PP prices by an additional 1 cent/lb. However, buyers and other market participants said the move was unsuccessful.

"They have been trying this for at least two years," said one buyer. "It's always a tough thing to accomplish ... I don't see that happening."

Demand has improved in the PP market in July, as buyers seek to rebuild their inventories at what they believe to be the low point of the market, sources said.

However, even as producers run at nearly full capacity, there does not seem to be enough material to go around, according to one broker, who said too much slack has been removed from the market to meet the need in heavy demand months.

"This is a real interesting situation where people want to buy the stuff and there is absolutely nothing to sell them," the broker said.

Even with spot PGP prices lower than the July contract PGP prices, there has not been a similar reduction in spot PP prices, the broker said, adding that spot PP prices are about on par with domestic contract prices.

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

($1 = €0.82)


By: Michelle Klump
+1 713 525 2653



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