US PP May contracts drop 1 cent/lb following feedstock PGP

HOUSTON (ICIS)–US  polypropylene (PP) May contracts dropped 1 cent/lb following the feedstock propylene settlement earlier this month, sources said on Thursday.

PP monthly contracts have dropped in four of the past five months this year, mainly because of declining feedstock propylene, which is oversupplied.

Most PP sources confirmed the settlement, though one source said the contract decision was not clear-cut.

“Some customers did not go down one,” the source said. “It depends on who you buy from and what indexes you use.”

Propylene’s movement in any given month historically has determined the direction and size of the PP monthly price, with one or two exceptions each year. This year there already have been two monthly exceptions, because of producers expanding their margins by giving customers a smaller price reduction.

The monthly PP settlement diverged in January, when the feedstock dropped 12 cents/lb and PP dropped only 10 cents/lb. And the PP settlement diverged again in April, when propylene settled down 6 cents/lb and PP settled down 4 cents/lb.

The May drop puts US PP contract prices at 59-61 cents/lb DEL (delivered) for homopolymer injection and raffia-grade material for medium to small volume buyers, as assessed by ICIS.

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