US PP April contracts down 10 cents/lb with propylene

12 April 2013 20:21  [Source: ICIS news]

HOUSTON (ICIS)--US polypropylene (PP) contract prices settled lower by 10 cents/lb ($220/tonne, €167/tonne), following a similar decrease in feedstock propylene, sources said on Friday.   

US PP contract prices for April were at 74.00-77.00 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 lower at 63.00 cents/lb for April.

The price drop is expected to lead to at least a slight improvement in domestic demand as buyers need to purchase material after months of living off existing inventory, sources said.

However, some said that the fact that prices fell by 10 cents/lb as opposed to the expected 5-7 cents/lb could cause some buyers to think that prices will drop even further in May.

"Some customers are going to have to come back and buy because they are out of material or close to it," said one distributor. "The thing that sometimes happens when it drops double-digit numbers is customers get even more concerned more is going to come out and try and hold out even longer so they don't miss out on the next drop."

Even with the price drop, US PP prices are still on average about 5 cents/lb higher than they were in December 2012. Sources are split about how much more prices will drop before they hit bottom.

One producer said it believes prices will only fall by an additional 1-2 cents/lb.

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

($1 = €0.76)

By: Michelle Klump
+1 713 525 2653

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