US polypropylene contracts for June were settling this week at a 3-cent/lb ($66/mt) increase, following a similar hike on feedstock propylene, sources said Friday.
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.
The settlement was delayed by negotiations on the propylene side, which culminated this week in a split settlement -- the first since Q1 2011 -- that saw polymer-grade propylene up 3 cents/lb to 65 cents/lb delivered and chemical-grade propylene up 2 cents/lb to 62.50 cents/lb delivered basis.
These settlements usually occur within the first two weeks of the month.
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, as per market sources.
Because of the delay, some distributors had already been billing customers at a 3-cent/lb increase, sources said.
Back-to-back months of healthy domestic demand have combined with production hiccups on the monomer and polymer side to keep supply snug, market sources said.
The market is currently dealing with force majeure declarations by Formosa Plastics Corporation USA (through the end of the month) and Pinnacle Polymers, the latter the result of feedstock supply issues, the company said.
One distributor source said spot availability was scarce, and generic prime material could not be had from producers below 73-74 cents/lb, with the secondary spot market commanding prices in the high 70s cents/lb, sources said.
On the export side, US-origin product was unworkable to destinations beyond Mexico given its high prices, sources said. Spot homopolymer injection for export was last assessed Thursday at $1,576-$1,598/mt FAS Houston, with no trades, bids or offers heard.
