US propylene buyers see flat October despite proposed increases

30 September 2010 21:22  [Source: ICIS news]

HOUSTON (ICIS)--US propylene (C3) contracts are likely to settle flat in October despite nominations for an increase by two US producers, buyers said on Thursday, citing supply length and slowing demand.

Market participants said one US propylene producer nominated a rollover for October, but two of its rival suppliers had announced increases of 1.00 cent/lb ($22/tonne, €16/tonne) and 2.00 cents/lb.

US propylene contracts usually settle at the beginning of the month being negotiated.

Polymer-grade propylene (PGP) in September settled at 60.00 cents/lb, up by 2.50 cents/lb from August, while chemical-grade propylene (CGP) contracts were agreed at 58.50 cents/lb, also rising by 2.50 cents/lb.

A possible flat settlement in October would restore some stability to the US market, following an 8% increase in the last two months.

US propylene contracts had already risen by 2.00 cents/lb in August before jumping by additional 2.50 cents/lb in September.

The uptrend was driven by firm demand and a tight market, but sources this week said US propylene supply had lengthened while demand was starting to slow down.

Market sources continued to cite the imminent start-up of Petrologistics’ new propane dehydrogenation (PDH) plant in Texas as another factor weighing on the US propylene market.

The PDH unit, the only one of its kind in the US, will produce CGP and PGP but its start-up, which was originally scheduled for late July, has been delayed several times since then.

Petrologistics was previously expected to launch operations this week, but sources said the company was now planning to bring the 544,000 tonne/year unit on stream in the first week of October.

Petrologistics did not immediately respond to a request for comment.

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

Dow Chemical, INEOS, Ascend Performance Materials and Total are among the main buyers.

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By: William Lemos
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