Dow plans 6-8 cent hike on US solvents prices on higher propylene

03 February 2010 18:52  [Source: ICIS news]

HOUSTON (ICIS news)--Dow Chemical plans to raise US prices on a few dozen oxygenated solvents products, effective on 1 March, due to an increase in propylene prices, according to a customer letter obtained on Wednesday.

Dow cited the "continuing tightening of propylene" in the letter as the cause for increases of 6-8 cents/lb ($132-176/tonne, €95-127/tonne) on US butyl acetate (butac), n-butanol (NBA), methyl isobutyl ketone (MIBK), 2-ethylhexanol (2-EH) and several propylene derivatives.

Last week, US propylene producers nominated increases of up to 14% for February contracts due to tight supply and low refinery operating rates.

Dow is a major consumer of polymer-grade propylene (PGP) and chemical-grade propylene (CGP), along with INEOS, Ascend Performance Materials and Total.

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

A large buyer reported locking in a first-quarter price for butac well within the current spot price range, and the buyer said his producer was not Dow.

"So their bleating is falling on deaf ears," the buyer said.

The butac spot price range for the week ended 2 February was 54-59 cents/lb, according to global chemical intelligence service ICIS pricing. Contract prices were 70-74 cents/lb and distributor rates were 75-80 cents/lb.

Dow's letter said list and off-list prices would be raised but did not specify the geographic area affected. However, the company did send the letter to US customers.

The company did not immediately respond to a call inquiring about the letter and the geographic area covered by the proposed price hikes.

A market source said propylene was tight not only due to low refinery rates but also from first-quarter plant shutdowns and scheduled outages globally.

The source said butac pricing needed to improve dramatically to cover the raw material costs and that demand had largely rebounded back to early 2008 levels.

"We don’t believe demand has doubled," the source added, "but demand is far stronger than last year."

Major US butac producers include Dow, Oxea and Eastman Chemical.

($1 = €0.72)

For more on propylene visit ICIS chemical intelligence
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By: Lane Kelley
+1 713 525 2653

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