US PP June contracts rise 3 cents/lb on higher propylene

27 June 2013 22:00  [Source: ICIS news]

HOUSTON (ICIS)--US polypropylene (PP) contract prices for June settled higher by 3 cents/lb ($66/tonne, €51/tonne), following a similar increase in feedstock propylene, sources said on Thursday.    

US PP contract prices for June were at 76.00-78.00 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). PGP prices settled higher at 65.00 cents/lb for June.

The increase was in line with expectations, based on higher spot PGP prices in June.

Buyers said they were not surprised by the amount of the increase, given supply tightness as well as higher costs for spot PP.

Traders and buyers said they have seen spot offers at between 77-79 cents/lb for prime material, which is in some cases higher than the June contract prices.

One trader said most buyers are not interested in paying such high prices for spot material, but there are a few who have been willing, particularly with two PP producers, including Formosa Plastics and Pinnacle Polymers, declaring force majeure this month.

"We are seeing a few people panicking - looking at numbers they wouldn't have looked at two weeks ago," said one trader.

While demand has been strong in May and June, producers have been running at near maximum capacity levels, which has helped to minimise the drawdown of inventories, sources said.

Demand is expected to fall off in July, which some sources said could lead to a price drop next month.

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

($1 = €0.77)

By: Michelle Klump
+1 713 525 2653

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