Price and market trends: LyondellBasell unveils additional polypropylene price hike

17 July 2014 18:13 Source:ICIS Chemical Business

US polypropylene (PP) producer LyondellBasell announced on 11 July a 2 cent/lb ($88/tonne) price increase for all grades of PP effective on 1 August.

The proposed price increase would be in addition to any change in the price of polymer-grade propylene (PGP), according to a 11 July customer letter obtained by ICIS.

For instance, if PGP prices rose by 1 cent/lb for August, the total increase for PP from LyondellBasell would be 3 cents/lb.

Certain specialty grades of PP may increase by a greater amount, the letter states.

The announcement is an effort by the company to improve the base margin for PP. Much of the PP market has a monomer-based contract that follows the monthly PGP cost.

In recent years, there has been a set margin for PP, with PP prices changing according to any fluctuation in the price of PGP.

US PP producers have succeeded in implementing about a penny of extra margin in 2013 and another penny in 2012.

The LyondellBasell announcement is the second such announcement about a margin bump this month. Last Thursday, Total Petrochemicals announced a 4 cent/lb increase to be effective on 7 July.

Sources said it will be difficult for producers to implement such an increase if other producers do not also announce similar increases.

US PP contract prices for June were at 79.50-81.50 cents/lb (DEL) for homopolymer injection and raffia grade material for small-volume buyers, as assessed by ICIS.

By Michelle Klump