“The overall energy complex has risen in price, and as a result this has pressured feedstock costs through the entire petrochemical chain,” says John Waggoner news editor of Americas at ICIS News, which tracks spot pricing in chemical markets. “It’s run up against a soft U.S. economy, so at every step of the production chain you have compression in margins.”
Plastics contracts have traded on the London Metals Exchange since 2005. In June of 2005, a ton of polypropylene traded at $951.09; the June 2008 contract traded recently at $1685 per ton. Such a market doesn’t exist in the U.S. yet, making it difficult for plastics buyers to hedge themselves, Mr. Waggoner says (they may opt to do so using natural gas, crude oil or propane futures). Polypropylene is a product used in many plastics applications, including packaging, carpeting and lab equipment.”
Click here for the full article.