US June PP drops 6 cents/lb, third straight decline

HOUSTON (ICIS)–US June polypropylene (PP) contracts dropped 6 cents/lb, sources said on Thursday, marking the third straight monthly decline because of a rising tide of imported material.

The June cut brings contract reductions this year to 9.5 cents/lb and monthly prices a few cents below where they were at the same time last year.

Producers have cut prices three months in a row trying to hold on to market share. Two producers announced cuts of 3-5 cents/lb for June, but sources say savvy customers have obtained greater reductions, depending on the producer.

One veteran PP watcher knew of customers who got reductions of 7-8 cents/lb, though the source said such cuts probably were not representative of the market.

Another source had heard of customers getting such cuts and agreed that such reductions were not representative of the market. That source said producers were giving bigger discounts to customers who pressed the issue.

“They’re only going to put it on for people that squeak,” the buyer said of the greater reductions.  

The drop in PP contracts stems from the wave of imports that have flooded into the US this year because of high American prices.

Sources said the market is still reeling from the surge in imported material from Asia, Latin America and the Middle East that has created a surplus of material.

Imports in the first five months this year increased 165% during the first four months this year compared with the same period in 2015. The import wave has increased PP inventories to record highs, rising in both April and May above the previous month.

Major producers include Braskem, ExxonMobil, Flint Hills Resources, Formosa Plastics, Indelpro, INEOS, LyondellBasell, Phillips 66, Pinnacle Polymers, Sasol and Total Petrochemicals.