14 February 2013 21:59 [Source: ICIS news]
US PP contract prices for February were at 90.00-93.00 cents/lb DEL (delivered) for homopolymer injection and raffia grade material for small-volume buyers, 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 settled higher at 79.00 cents/lb for February.
The increase was slightly less than had been initially expected, with initial nominations for an increase of 7-9 cents/lb.
However, with spot February PGP trading at 64-65 cents/lb on Thursday, buyers in the PP market were frustrated by the timing of the settlement.
"That was a ridiculous settlement," said one buyer, who said it will now be impossible to push price increases through to downstream customers who are aware that feedstock costs are dropping.
A distributor agreed, saying demand will be terrible in February, with buyers anticipating a free fall in prices to begin in March.
"Two days after the settlement the market collapses? To buyers, it feels like they are getting ripped off," the distributor said. "There is no demand out there. You can't imagine how soft it is."
Traders said they expect to see producers begin offloading material into the secondary markets in the next few weeks, trying to get rid of higher-priced inventory before the price falls.
Major North American PP producers include LyondellBasell, ExxonMobil, INEOS, Total, Formosa Plastics, Braskem Americas, Pinnacle Polymers, Phillips 66 and Flint Hills Resources.
($1 = €0.74)
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