20 September 2012 22:13 [Source: ICIS news]
(recast with paragraphs 11-13)
HOUSTON (ICIS)--The US polypropylene market remains very tight with a number of production problems, including a force majeure (FM) on certain PP grades declared by LyondellBasell last week, sources said on Thursday.
Buyers and traders said there is very little material being offered on the spot market – a situation they attribute more to production problems than to strong demand in the PP sector.
Sources mentioned production problems experienced by as many as three producers, but those problems could not be confirmed with those producers.
However, in a 13 September letter obtained by ICIS, LyondellBasell informed customers it was declaring force majeure for certain grades of PP, including 6523, 6524, HP553J, PD702, PD702NW and HP451P.
The force majeure was related to a mechanical breakdown in the extrusion section of one of its PP production lines, the letter states.
The company was expected to have put customers on allocation, but allocation levels could not be determined. A company spokesman declined to comment, citing the company's policy of not commenting on day-to-day operations.
Pinnacle Polymers also remained on force majeure for PP, based on difficulty in obtaining raw material supplies, sources said. The company has brought all of its units back up, following a shutdown during Hurricane Isaac, but the units are not up to full production levels, sources said.
Buyers said the tight supply comes at a decent time, after they were able to load up on inventory during the summer.
"My inventory is still pretty heavy. I'm not in the market," said one buyer, who added it has not been approached with any recent offers for spot material.A producer agreed that downstream demand is not as strong as expected for this time of year. However, the producer said with the amount of capacity that is down, that should present more support for PP prices.
When spot material has been available, it has been quoted at higher prices than the domestic contract prices, sources said.?xml:namespace>
One trader, who said material has been unavailable during the week, said the price for off-grade material is probably around 58-60 cents/lb, while prime material is probably in the mid-60s cents/lb range.
Prices for domestic homopolymer PP injection grade material were at 61.50-63.50 cents/lb ($1,356-1,400/tonne, €1,044-1,078/tonne).
($1 = €0.77)
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