US propylene for October begins to settle down 1.5 cents/lb

08 October 2010 17:23  [Source: ICIS news]

HOUSTON (ICIS)--US propylene contracts for October began to settle down by 1.50 cents/lb ($33/tonne, €24/tonne), pressured by weakening demand and anticipated supply length, market sources said on Friday.

The initial settlements, which represent a 2.5% drop from September, put polymer-grade propylene (PGP) at 58.50 cents/lb and chemical-grade propylene (CGP) at 57.00 cents/lb.

Market participants said the drop stemmed from softening polypropylene (PP) demand and expectations that monomer supply would increase in October with the start-up of Petrologistics’ new propane dehydrogenation (PDH) plant.

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

Petrologistics said it expected to start feeding propane into the 544,000 tonne/year plant during the weekend.

Provided everything runs smoothly, the unit could produce on-spec propylene within a day after it begins feeding propane, one market participant said.

Petrologistics declined to comment on a timeline.

Downstream, US PP demand was expected to slow down in October, market sources said, citing heavy buying in September and inventory trimming ahead of the end of the year.

However, PP demand on the export side could improve in the fourth quarter, a producer said.

The drop in the monomer price and a weaker US dollar would make the US resin more competitive in Latin America, the source said, who predicted the US could displace Asian PP exports going into the region.

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.

($1 = €0.72)

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By: William Lemos
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