HOUSTON (ICIS)--US polypropylene (PP) contracts for December settled at a rollover as earlier margin expansions were reversed in the face of steadily climbing monomer costs.
US PP contracts are generally formula-based and are set at polymer-grade propylene (PGP) values plus an adder.
Sellers had announced 3 cent/lb ($66/tonne) margin expansion proposals in August, and some of this expansion was implemented on most contracts. ICIS implemented a cumulative expansion of 1 cent/lb over the course of September and October.
Margin expansion proposals have been losing traction over the past two months in the face of steadily rising feedstock propylene costs, with buyers stating that additional margin expansion on top of the significant rise in monomer would push domestic PP prices to a level high enough to attract large volumes of imports.
Accordingly, participants commented that earlier agreed margin expansions were reversed on many contracts, and ICIS accordingly reversed its earlier 1 cent/lb expansion this month.
US propylene contracts settled up by 1 cent/lb for December and have posted cumulative increases of 11.5 cents/lb over the past six months.
ICIS assessed December contracts for homopolymer PP injection at 68-72 cents/lb delivered in bulk US while contracts block copolymer PP were assessed at 69-73 cents/lb with the same terms.
Major US PP producers include Braskem, ExxonMobil, Formosa, INEOS, LyondellBasell and Total Petrochemicals.