16 January 2009 17:27 [Source: ICIS news]
Correction: In the ICIS news story headlined “US C3 snaps 4-month slide; January begins to settle higher” dated 16 January 2009, please read in the second paragraph … polymer-grade propylene (PGP) at 22.00 cents/lb … instead of … 22.50 cents/lb …. A corrected story follows.
HOUSTON (ICIS news)--US propylene contracts for January began to settle up 2 cents/lb ($44/tonne, €33/tonne), snapping a four-month slide with the help of tight supply and slightly improved demand, market sources said on Friday.
The initial settlements put chemical-grade propylene (CGP) at 20.50 cents/lb and polymer-grade propylene (PGP) at 22.00 cents/lb, according to global chemical market intelligence service ICIS pricing.
Market sources said all US suppliers have agreed to a 2 cent/lb increase in January, but one buyer said some consumers were still fighting to keep prices from going up.
However, the buyer acknowledged contracts were likely to settle 2 cents/lb higher.
“I don’t see any other outcome at this point,” the source said.
US propylene spot prices reversed the downtrend in early January when refinery-grade propylene (RGP) began to inch up following a brief spike in the crude oil market.
Although the recovery in the energy complex proved short-lived, propylene held its own amid a potential supply/demand imbalance caused by shutdowns in the US industry.
Spot RGP for January last traded on 15 January at 19.25 cents/lb, up from 15.00 cents/lb on 5 January.
RGP had last been heard traded in 2008 at 13 cents/lb for a deal done on 17 December.
A consensus existed on both sides of the US market that propylene demand has shown signs of improvement in January.
However, one producer remained sombre. The best that could be said is that the market was less weak than it was in December, the source said.
Both grades of US propylene fell by just over 75% between September and December, pressured by soft demand and a slump in crude oil and feedstock prices.
PGP contracts had peaked at 85.00 cents/lb in July, while CGP topped out at 83.50 cents/lb.
Market sources said ethylene is likely to mirror the pattern in the propylene market when contracts settle later this month.
That would also mark a turnaround from the steep decline in ethylene seen in the second half of 2008.
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.
US spot ethylene traded on Friday at 26.00 cents/lb, up from deals done at 20.75 cents/lb on 30 December.($1 = €0.76)
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