US September PP contracts settle higher, tracking propylene

Author: Zachary Moore

2019/09/27

HOUSTON (ICIS)--US September polypropylene (PP) contracts were assessed 1 cent/lb ($22/tonne) higher, tracking an equivalent rise in the September propylene contract.

US PP contracts are typically formula-based and are set at feedstock polymer-grade propylene (PGP) values plus an adder.

Adders have been under pressure in recent months as PP demand has been sluggish while supplies have remained long.

Demand has fallen short of expectations for 2019 as a slowdown in global manufacturing activity has dented PP consumption growth.

The automotive sector has faced a particularly challenging year. This has had a significant effect on PP, as it is one of the most widely used polymers in automotive manufacturing.

Supply levels have been sufficient for much of the year. PP operating rates have been generally healthy as propylene supplies have been long.

In addition, the industry added new capacity in 2018 through debottlenecking projects. More capacity additions in North America are on schedule for 2019, 2020 and into the next decade.

PP is used for packaging, ropes, carpets, plastic parts, loudspeakers and automotive parts.

ICIS assessed September contracts for homopolymer PP injection at 56.5-60.5 cents/lb delivered in bulk US, while contracts block copolymer PP were assessed at 57.5-61.5 cents/lb.

Major US PP producers include Braskem, ExxonMobil, Formosa, INEOS, LyondellBasell, Phillips 66 and Total Petrochemicals.

0ED1E424FE1BE80CD7B521EB80C403AF.jpgImage above shows a bottle made of polypropylene, the main end market for propylene. Source: PhotoAlto/REX/Shutterstock