Ineos Olefins and Polymers seeks to increase its polypropylene prices in the US by 2 cents/pound ($44/metric ton) for July, joining other producers seeking to expand margins for the second time this year, market sources said Monday.
The proposed increase would be in addition to any change in the contract price for polymer-grade propylene from June to July, Ineos told customers in a letter that Platts obtained.
Ineos is one of at least two producers that have announced additional increases of 2 cents/lb. LyondellBasell, through its Equistar and Mexico City-based Basell Poliolefinas subsidiaries, on Friday announced a 2-cent/lb hike over the PGP movement on North American pricing for August.
The nominations came as polypropylene contracts for June settled late last week at a 3 cent/lb ($66/mt) increase, following a similar hike on feedstock PGP.
The 4% increase pushed homopolymer injection grade polypropylene to 74-75 cents/lb ($1,631-$1,653/mt) on a delivered-railcar basis, as assessed by Platts.
Recent force majeure declarations by Formosa Plastics and Pinnacle Polymers on the production side have further squeezed an already tight supply in a busy market, sources said.
“With the Pinnacle and Formosa [force majeures], I think these pricing announcements have more to do with actual pellet availability and demand versus monomer,” a source with a distributor said. “If the producers can get a PP increase even if monomer stays flat, they can increase their margins.”
Polypropylene contracts track PGP settlements, as a majority of contracts are on a monomer-plus basis, with the premium over PGP between 8-12 cents/lb, per market sources.
Earlier this year, producers were successful in realizing an average of 1 cent/lb of margin expansion on contract product, citing rising costs, sources said.
Source: platts.com
