25 January 2013 10:44 [Source: ICB]
Some buyers say they are starting to hear offers of PP material from overseas at cheaper prices than US material
The price range widened to account for an additional 1 cent/lb of margin expansion that many producers were able to implement into 2013 contracts. Several buyers confirmed that they will see the additional penny starting in January, while others said they did not expect to see it until later in the year.
The increase was significantly more than most market participants had expected, with buyers and suppliers initially expecting a 3-5 cent/lb increase for the month.
"It just reinforces all of the negative connotations about the PP market that we started to get rid of the second half of last year," said one PP distributor."
While PP prices tend to rise in the first quarter of the year, the relative stability of pricing in the second half of 2012 led many market participants to expect similar stability going into 2013, sources said.
However, PGP spot prices rocketed during the first few weeks of the year, following several unplanned cracker outages, as well as a three-week shutdown at a Petrologistics propane dehydrogenation unit in Texas.
In 2012, when buyers were expecting a huge increase in prices, many built inventory ahead of the increases. That was not possible in this case, sources said.
"Nobody had a chance to get ready for it... nobody was expecting it to go up this fast, this soon," said one market participant.
Some buyers said they were hearing offers of PP material from overseas at cheaper prices than US material. While they agreed there are some logistics challenges, some buyers said they would consider purchasing material from Asia or the Middle East, given the high US prices.
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