North American polypropylene producers stand a good chance of increasing margins on domestic contract pricing by as much as 2 cents/lb ($44/mt) for April on supply tightness, a producer source said Tuesday.
North American producers including Braskem America, LyondellBasell and Total Petrochemicals & Refining USA have announced increases for April independent of feedstock propylene contract pricing behavior.
Braskem Americas is seeking a 3 cents/lb increase. LyondellBasell intends to raise prices by 5 cents/lb, while Total is aiming for 4 cents/lb, according to company letters sent to customers and obtained by S&P Global Platts.
Recent decreases in feedstock propylene pricing — US polymer-grade propylene contracts shed a combined 12 cents/lb ($264.55/mt) in February and March — have significantly lowered PP production costs and should incentivize demand, and thus improve producers’ chances of expanding margins, at a time when inventories are low, the source said.

However, other market sources have cautioned that the likeliness of the margin expansion to be implemented is dependent on how quickly demand is able to pick up after being diminished due to high costs and expectations of upcoming lower pricing.

Sources have cautioned that if the producers implement expansions early, it could diminish demand and buyers could look towards imported material as opposed to domestically-produced material.

Domestic polypropylene pricing was assessed Wednesday at 61.5-62.5 cents/lb rail-car basis for homopolymer injection grades, with the fiber-grade price assessed at a 2-cent/lb premium at 63.5-64.5 cents/lb rail-car basis.

A significant portion of PP contracts in North America remain on monomer-plus formulas, with the premium over PGP talked at 14-16 cents/lb.

US March propylene contract prices were settled at a 6 cents/lb decrease to 47 cents/lb for polymer-grade product, sources said.