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Wednesday, January 19, 2022

US Formosa Plastics declares force majeure on polypropylene, cites outage

US polymer maker Formosa Plastics Corporation on Tuesday declared force majeure on all of its Formolene polypropylene products because of an unplanned outage at a Texas facility.

The company announced the measure in a letter to customers that was obtained by Platts.

Formosa plans to institute an allocation process for the duration of the event, although the quantities are being evaluated, the letter said.

The company cited unplanned outages at its Texas polypropylene production units as the reason for the measure. Formosa’s olefin and polymer production units in Texas are in Point Comfort, 120 miles southwest of Houston.

A call to Formosa seeking further information about the outage and the force majeure was not returned by time of publication.

The outage and force majeure come as US polypropylene participants await contract price settlements for June. Expectations entering the week were for polypropylene contracts to increase 2-3 cents/lb ($44-$66/mt) from May on a cost push from feedstock polymer-grade propylene, which is also expected to rise 2-3 cents/lb for June.

Earlier this month, Formosa issued a 3-cent/lb increase nomination for all polypropylene contracts, sources said.

The homopolymer injection contract price for May was assessed by Platts at 71-72 cents/lb ($1,565-$1,587/mt) on a delivered-via-railcar basis.

Homopolymer injection polypropylene for export was last assessed Monday at $1,543-$1,565/mt on an FAS Houston basis.

Souurce: platts.com

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