HOUSTON (ICIS)--US polypropylene (PP) contracts for October generally settled lower by 2.5 cents/lb ($55/tonne, €41/tonne), despite ongoing efforts by some producers to expand margins, sources said on Thursday.
US PP contract prices for October were at 78.5-80.5 cents/lb DEL (delivered) for homopolymer-injection and raffia-grade material for medium- to small-volume buyers, as assessed by ICIS.
Much of the PP market has a monomer-based contract that follows the monthly PGP price, which settled lower by 2.5 cents/lb at 67.5 cents/lb for October.
For several months, producers have been attempting to implement an additional 2 cent/lb margin bump for PP. While some very small buyers have accepted the increase, sources said others will not likely see any margin increase implemented until January 2014 when new contracts become effective.
"So far, they are not getting the extra 2 cents/lb," said one buyer, who added that producers would likely push harder for the margin increase by the end of the year.
Despite the price drop, sources said demand has not been very strong for the month, with many buyers waiting on the sidelines for another expected price drop in November.
"Most people built inventory over the summer, and they are just unwinding some of those positions now, waiting for the prices to come down a little bit more," said one distributor.
Sources said they expect prices to fall by another 2-3 cents/lb in November, based on lower spot prices for propylene.
Major North American PP producers include LyondellBasell, ExxonMobil, INEOS, Total, Formosa Plastics, Braskem Americas, Pinnacle Polymers, Phillips 66 and Flint Hills Resources.
($1 = €0.74)