16 May 2013 21:29 [Source: ICIS news]
US PP contract prices for May were at 73.00-76.00 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 62.00 cents/lb for May.
The decrease was slightly less than was initially expected. But after PGP prices rebounded in recent days, sources said it was becoming apparent that a penny decrease was all the market would support.
"I believe we have now reached the very bottom," said one PP producer.
PP demand has significantly improved in May as buyers began to return to the market after staying on the sidelines during a 21 cent/lb increase in prices from December 2012 through February 2013.
Spot material has become more scarce, and some producers have said they are sold out of material for the month.
"I think everyone sensed that the market was bottoming out... so this was a good time to restock and build some inventory," said one market participant.
Market participants are conflicted about what June will hold, with many suggesting there will be a flat settlement, and others hoping there may be an additional price drop of a penny or two.
However, sources said they are expecting the second half of 2013 to mirror the second half of 2012, with a period of stability.
Major North American PP producers include LyondellBasell, ExxonMobil, INEOS, Total, Formosa Plastics, Braskem Americas, Pinnacle Polymers, Phillips 66 and Flint Hills Resources.
($1 = €0.78)
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