Polypropylene price hike is stalled for now

Propylene price hike isn’t pushing resins forward

By Tom Stundza -- Purchasing, 1/23/2008 11:07:00 AM

It is becoming less likely that polypropylene producers will attain their price-increase targets of up to 5¢/lb this month, according to a review of prices being paid by buyers this month. Buyers say they paid 75¢/lb for the second month in arrow in January, rejecting the 3¢ increase initially announced (or a downgraded to a 2¢ increase by some suppliers).

Also, a majority of the buyers polled say they will continue to fight against the January increase and another 2¢ price increase announced by some suppliers for February. Basic feedstock propylene monomer averaged 57¢/lb this month, buyers report, which is a 2¢ increase from the December average. But it takes a while for the chemicals feedstock price to filter down to the resins price.

Producer have cited margin pressures, recent capacity reductions in North America, and continued strong demand as supporting factors for the price-hike proposals. Buyers, on the other hand, are saying that demand actually is softening since only about 30% of those sourcing polypropylene plan to boost first quarter purchasing.

A report on subscription news service ICIS.com says that most processors were only buying polypropylene material as needed. Demand for automotive materials is particularly soft.