US Jan IPA price-hike efforts intensify on rising propylene costs

07 January 2011 23:13  [Source: ICIS news]

HOUSTON (ICIS)--At least two US isopropanol (IPA) producers will seek contract price gains of 10 cents/lb ($220/tonne, €169/tonne) effective 20 January on anticipated sharply higher feedstock propylene prices, sources confirmed on Friday.

Sources said ExxonMobil announced its intent this week to seek the IPA increase, and Dow Chemical confirmed with ICIS that it would seek an identical hike. A third producer’s similar price-hike initiative was expected to be announced soon, according to market sources.

Propylene is going nuts. That’s the driver,” an IPA customer said. “Buyers don’t have a whole lot of choice.”

Propylene market players began to talk about a possible split settlement after one chemical-grade propylene (CGP) producer was said to have settled at plus 11 cents/lb for January and flat for February.

Other propylene producers were adamantly opposed to accepting anything at that level, given proposed hikes of at least 15 cents/lb for January, which stemmed from cracker outages and a surge in the refinery-grade propylene (RGP) spot market.

Propylene supply remained constrained in the US as Shell is still on 85% allocation after a disruption at one of its crackers.

Elsewhere, a force majeure (FM) on acrylates from Arkema in France stemmed from a propylene-supply interruption.

The buyer added that near-term domestic IPA demand would likely spike as customers seek additional volumes ahead of expected increases.

In the meantime, some IPA buyers said they had accepted 1 January increases of 5 cents/lb based on December chemical-grade propylene (CGP) gains of 3 cents/lb, which took the feedstock contract to 59 cents/lb.

December IPA contract prices were 74-77 cents/lb, as assessed by ICIS. Although broad early-January gains were widely expected, contract prices remained unchanged pending further market confirmation.

US IPA producers include Shell Chemicals, Dow Chemical, LyondellBasell and ExxonMobil.

($1 = €0.77)

For more on IPA visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Larry Terry
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