NewsFlashUS July PGP settles up 9, 10 cents/lb

10 July 2008 23:38  [Source: ICIS news]

HOUSTON (ICIS news)--US July polymer grade propylene (PGP) contracts settled up by 9 and 10 cents/lb ($198-220/tonne, €127-141/tonne), market sources said on Thursday.

The settlement increased the combined June/July contract up by 16 cents/lb, sources said.

June PGP contract negotiations had resulted in a split settlement at a 6 cent/lb and a 7 cent/lb increase last week, depending on the supplier.

Those buyers who accepted the lower amount in June will be paying a 10 cent/lb hike in July.

Consumers paying the 7 cent/lb increase in June would be expected to pay a 9 cent/lb increment in July.

The settlements put PGP contracts at 85 cents/lb, the fifth record high in 2008, according to global chemical market intelligence service ICIS pricing.

US propylene producers had originally nominated July PGP and chemical grade propylene (CGP) contract price increases of 9, 14 and 15 cents/lb amid a sustained surge in crude oil prices.

Negotiations regarding CGP July contracts were heard to be ongoing. 

The proposed July increases had stunned buyers, who said a nomination of that magnitude was difficult to transfer down the supply chain.

One non-integrated polypropylene (PP) manufacturer has said it is revising its pricing mechanisms to cope with extreme volatility in feedstock monomer pricing.

Equistar, ExxonMobil, Chevron Phillips Chemical, Shell Chemical and Enterprise Products are among the major US producers of PGP and CGP.

Total, Solutia, Dow Chemical, Rohm and Haas and INEOS are among the main buyers.

(Additional reporting by David Barry)

($1 = €0.64)

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By: Gabriela Wheeler
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