04 February 2010 17:26 [Source: ICIS news]
HOUSTON (ICIS news)--US propylene contracts for February were fully settled at an increase of 6.5 cents/lb ($143/tonne, €103/tonne), market sources said on Thursday, citing firm demand and tight supply.
The settlements put polymer-grade propylene (PGP) at 63.50 cents/lb and chemical-grade propylene (CGP) at 62.00 cents/lb, according to global chemical market intelligence service ICIS pricing.US propylene producers had nominated increases of 6 and 8 cents/lb for February, spurred on by a pickup in demand following possible de-stocking at the end of 2009.
But the 12% increase on the monomer was also fuelled by a jump in refinery-grade propylene (RGP) spot prices in January.
RGP, a by-product of petroleum refining, is the main feedstock for higher-purity US propylene.
The product traded this week at 55.00 cents/lb, which is up from deals done at 48.50 and 49.50 cents/lb in the first week of January.
The surge in RGP stems from curtailed production, as US refineries are running at lower rates because of weak gasoline demand and high inventories.
US refineries ran at 77.7% of capacity in the week ended 29 January, down from 78.4% a week earlier and 83.5% in the week ended 30 January 2009, according to data from the Energy Information Administration (EIA).
Refineries are running at the lowest level since the 1980s, excluding periods of downtime caused by hurricanes, a market analyst said.
US refineries ran at 69.8% in the aftermath of Hurricane Rita in September 2005 and at 66.7% when Ike struck Texas in September 2008, based on government data.
US propylene supply from steam crackers is also restricted because US olefins plants have continued to move away from naphtha to run mostly on lighter feedstocks.
Overall, NGLs make up some 80% of the feedstocks in the industry.
Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell and Shell Chemical are among the major US producers of PGP and CGP.
Ascend Performance Materials, Dow Chemical, INEOS, and Total are among the main buyers.
($1 = €0.72)
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