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LyondellBasell Polypropylene Force Majeure Comes Amid Strong Demand and High Prices
March 30, 2022
North American Polypropylene (PP) production was dealt a significant blow on Wednesday, following a force majeure (FM) declaration at one major resin producer's facility in Louisiana.
LyondellBasell said in a letter to customers that its Equistar business declared force majeure on PP grades at its Lake Charles facility in Louisiana, following a mechanical gearbox failure beyond its control. The company said the equipment failure will impact its PP extrusion capacity, and limit its ability to produce certain grades of PP.
Allocations of LyondellBasell's PP grades will also be calculated based on the purchase history of its PP grades over the past six months through February.
The FM comes as domestic Polypropylene (PP) spot prices sit near yearly highs amid strong demand from processors and resellers, and strained supply availability. Homopolymer and Copolymer PP established 2022 highs during March at $1.02/lb and $1.12/lb, respectively, according to The Plastics Exchange.
Current PP spot levels are down $.02/lb from the 2022 yearly highs seen in early March, but sustained demand has kept the market from seeing further declines.
LyondellBasell as already said it would implement a US $.04/lb price increase for all PP products sold in North America effective April 1, in addition to any change in US Gulf Polymer-Grade Propylene (PGP) pricing between March and April.
No other PP producers have formally announced margin increase initiatives for April yet.
By Brian Balboa for The Plastics Exchange.
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