US Dec propylene contracts fully settle up 3 cents/lb

08 December 2010 16:14  [Source: ICIS news]

HOUSTON (ICIS)--US propylene contracts for December were fully settled at an increase of 3.00 cents/lb ($66/tonne, €50/tonne), market sources said on Wednesday, lifted by tight supply following a series of cracker and refinery outages.

The 5% increase from November puts chemical-grade propylene (CGP) contracts in December at 59.00 cents/lb and polymer-grade propylene (PGP) at 60.50 cents/lb, as assessed by ICIS.

US propylene producers had originally nominated increases of 3.00 and 3.50 cents/lb for this month.

A full-market agreement at plus 3.00 cents/lb was widely expected, even though one producer at first had not agreed to the increase and was holding out for a higher price.

Limited supply and rising refinery-grade propylene (RGP) spot prices in November were among the factors supporting higher contract prices in December, according to sources.

RGP ended November trading at 48.00 cents/lb, up from 46.25-46.50 cents/lb in the first week of the month.

RGP prices rose because of refinery outages and a drop in inventories, market sources said.

US propylene inventories fell by 6.4% in the week ended 26 November to 1.956m bbl, according to the latest figures from the US Energy Information Administration (EIA).

EIA data showed that refinery-sourced propylene stockpiles stood at 2.456m bbl in the first week of October.

RGP began December on a sustained uptrend, trading at 49.50-51.50 cents/lb in the week ended 3 December, up from 49.00 cents/lb a week earlier.

Spot PGP for December soared to 65.00 cents/lb in the first week of the month, rising from a November deal done at 58.25 cents/lb in the previous week.

The spike in PGP last week came amid tight supply, market sources said, adding that the deal had fuelled resistance by the hold-out producer to accept an increase of only 3.00 cents/lb for December.

December RGP was bid on Tuesday at 52.00 cents/lb, with no offers, while PGP was bid at 64.00 cents/lb, also without offers.

Major US producers of PGP and CGP include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell, Petrologistics and Shell Chemical.

Main buyers include Dow Chemical, INEOS, Ascend Performance Materials and Total.

($1 = €0.75)

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By: William Lemos
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