The massive floods brought by Hurricane Harvey has paralysed a large portion of the US chemical industry, overwhelmingly located in Texas and Louisiana, the states most affected by the storm.
Indelpro is raising prices by 10 cents/lb ($220/tonne) so far, and further increases could come next week when more is known about the status of the affected plants.
About 30% of the propylene used in Mexico for PP production comes from the US. Local production of propylene has been normal, a source with Indelpro said.
Demand is increasing in Mexico as buyers strive to secure PP resins for their products.
Prices for homopolymers are being quoted around $1,500/tonne, with block copolymers selling at about $66/tonne over homopolymers and random copolymer material at a premium of $132/tonne.
Demand from foreign sources is creating opportunities for exports. Buyers seek to build inventories before prices get higher, but with the current feedstock uncertainty, suppliers don’t know what volumes will be available after domestic needs are covered.
Preliminary reports from the US suggest that about one-half of propylene production has been shuttered during the passage of Hurricane Harvey. It is also possible that the restart of the plants may uncover additional equipment failures. PP production is also affected in the US.
Even with successful restarts, there may be lingering logistic problems affecting deliveries. More will be known about this in coming days.
The Mexican peso has stabilised and is now at levels seen prior to the US elections, which initially weakened the currency.
Indelpro has about 50% of the local PP market, estimated at 1.3m tonnes/year. The other 50% comes from imports, mostly sourced from the US.
Current price for homopolyers is $1,260-1,305/tonne, according to ICIS.