Price and market trends: US PP May contracts down 1 cent/lb with propylene

24 May 2013 09:16  [Source: ICB]

Polypropylene contract price falls with declining feedstock, as players turn towards outlook for June

US polypropylene (PP) contract prices for May settled lower by 1 cent/lb ($22/tonne, €17/tonne), following a similar decrease in feedstock propylene, sources said on 16 May.

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.

 Demand improved during the month as players returned following December 2012 price hikes

Copyright: Rex Features

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.

MARKET PICKS UP
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.


US MAY PROPYLENE CONTRACTS SETTLE DOWN 1 CENT/LB ON SOFTER DEMAND

US May propylene contracts reached a full settlement at a slight decline, sources confirmed on 16 May.

Producers and buyers said US May polymer-grade propylene (PGP) and chemical-grade propylene (CGP) contracts fell by 1 cent/lb ($22/tonne, €17/tonne), matching earlier nominations.

This puts US PGP contracts at 62 cents/lb and US CGP contracts at 60.5 cents/lb.

At first, nominations for May propylene contracts came in at drops of 1 cent/lb and 3 cents/lb.

However, the producer that nominated the larger decline quickly revised its nomination to a decline of 1 cent/lb.

The contract drop is in line with spot values for PGP, which averaged about 57.875 cents/lb since April contracts settled.

Spot PGP prices had been at 58.25-58.50 cents/lb before April contract settlements.

A trade of PGP on 14 May at 61.25 cents/lb led to some speculation that prices were on an uptrend and that the May contract could settle at a rollover.

However, market sources said that was unlikely because of where prices had been for most of the month. Typically, US propylene contracts are settled toward the start of the month for the rest of the month and are often completed at a 2-3 cent/lb premium to recent spot trades. The May contract drop is the third in a row and puts US propylene contracts down by 17 cents/lb since they settled at a 2013 high of 79 cents/lb in February.


By: Michelle Klump
+1 713 525 2653



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