NPRA '10: US propylene uptrend weighs on buyer sentiment

28 March 2010 21:03  [Source: ICIS news]

DollarsSAN ANTONIO, Texas (ICIS news)--The uptrend in US propylene was a recurring theme among sources at an industry conference in San Antonio on Sunday, as delegates were mulling news that US producers are seeking increases of 16-18% for April.

Two US propylene producers have nominated an increase of 11 cents/lb ($243/tonne, €182/tonne) for April contracts and a third supplier nominated a 12 cent/lb hike, according to market participants.

US polymer-grade propylene (PGP) contracts for March settled up by 5 cents at 68.50 cents/lb, while chemical-grade propylene (CGP) settled at 67.00 cents/lb, according to global chemical market intelligence service ICIS pricing.

At least for the short term, propylene seems headed nowhere but upwards, a CGP buyer said on the sidelines of the National Petrochemical & Refiner Association (NPRA) meeting in San Antonio.

The buyer said it was considering expanding its capacity downstream, but the uptrend in CGP and the challenge to secure incremental pounds was making it difficult to move forward.

Another market participant attending the conference expressed dismay with US prices.

“Who can pay for that?” the source said, adding that propylene prices were back at 2008 levels, except that now the economy is much weaker than it was then.

“It kills activity in the chemical industry,” the source said.

A third market participant said propylene nominations for April were a “stretch” but the source predicted the monomer would remain on an uptrend for at least two more months.

The market may begin to taper off when Petrologistics comes on stream, the source said, referring to the upcoming start-up of the company’s 1.2bn lb/year (544,000 tonne/year) propane dehydrogenation (PDH) plant at Houston, Texas.

The plant will produce CGP and PGP from propane and production is scheduled to begin in the last week of July, according to Petrologistics.

The NPRA International Petrochemical Conference runs Sunday through Tuesday.

($1 = €0.75)

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By: William Lemos
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