26 July 2012 21:35 [Source: ICIS news]
HOUSTON (ICIS)--US polypropylene (PP) producer INEOS announced a 1 cent/lb ($22/tonne, €18/tonne) price increase for all grades effective on 1 August, sources said on Thursday.
The proposed increase is in addition to any increase in the price of polymer-grade propylene (PGP) contract prices in August, according to a copy of a 25 July 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 prices changing according to any fluctuation in the price of PGP. The price increase nomination is a second attempt by the company to boost base margins, after a similar effort failed in July, sources said.
With the PP market experiencing strong demand and supply tightness, now is a good time for producers to attempt such a margin increase, some sources said.
"I would assume if they are ever going to have a chance to do it, this would be it," said one trader. However, the trader noted it will be difficult if all of the producers do not support an increase.
One market participant said the measure has no chance of success, saying the demand right now is "a mirage" based only on low prices.
"The producer has not been born yet that can go out and get that extra penny. It is not going to happen," the market participant said.
US PP contract prices for July were at 63-65 cents/lb DEL (delivered) for homopolymer injection and raffia grade material, as assessed by ICIS.
($1 = €0.82)
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