Formosa announces 5 cent/lb increase for US December PP

27 November 2013 16:30  [Source: ICIS news]

Formosa announces 5 cent/lb increase for DecemberHOUSTON (ICIS)--US polypropylene (PP) producer Formosa Plastics announced a 5 cent/lb ($110/tonne, €81/tonne) price increase for all grades of PP effective on 1 December, sources said on Wednesday.

The announcement, made in a customer letter dated 26 November, offers no reason for the increase. However, sources said it can be attributed to expectations of higher feedstock propylene prices for the month.

While much of the US PP market remains on a monomer-plus formula contract basis, which follows the monthly change in feedstock propylene costs, Formosa Plastics moved away from monomer-plus contracts this year.

As part of its market-based pricing, the company still must pass on increases for feedstock propylene to customers each month.

At least one propylene producer has nominated an increase of 3 cents/lb for December.  

One market participant said it believed Formosa nominated 5 cents/lb in an effort to protect itself if propylene prices are nominated even higher.

The increase in propylene and PP is likely related to increased demand in the PP sector, as buyers attempt to build inventory ahead of anticipated Q1 2014 price increases, sources said.

US PP contract prices for November were at 77.50-79.50 cents/lb delivered (DEL) for homopolymer injection and raffia grade material for small-volume buyers, as assessed by ICIS.

($1 = €0.74)

By: Michelle Klump
+1 713 525 2653

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