21 May 2010 19:39 [Source: ICIS news]
HOUSTON (ICIS news)--US propylene contract prices are likely to settle lower in June, but the amount of the decrease remains a moving target, monomer and polypropylene (PP) market participants said on Friday.
Most downstream market sentiment was focused in the minus 8-10 cents/lb ($176-220/tonne, €141-176/tonne) range for June monomer contract pricing.
Propylene producers, meanwhile “are looking at 4-5 cents/lb down,... trying to keep any kind of spread,” a source said.
PP market participants forecast a bigger drop based on expected narrowing of the spread between polymer-grade propylene (PGP) and refinery-grade propylene (RGP).
A PP market source noted that the May PGP contract price at 63.5 cents/lb was 18-19 cents/lb above the most recent RGP spot deals, so an 8-12 cent decrease for June would bring prices close to the historical spread of 6-7 cents/lb.
The spread between RGP and PGP prices widened to more than 30 cents/lb at the end of April, before May PGP contracts fell by 12 cents/lb.
A supply bottleneck at the splitter units that upgrade RGP to PGP was cited as the cause of the wider spread.
Also, a series of planned and unplanned cracker outages in the past several months reduced the supply of co-product PGP and chemical-grade propylene (CGP) and helped to drive up prices.
($1 = €0.80)
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