US propylene supplier seeks 3 cent/lb increase in February

25 January 2011 19:15  [Source: ICIS news]

HOUSTON (ICIS)--A US propylene producer nominated an increase of 3.00 cents/lb ($66/tonne, €48/tonne) for February, but a recent softening in spot prices could thwart the initiative, market sources said on Tuesday.

According to sources, the supplier nominated a February contract price of 80.50 cents/lb for polymer-grade propylene (PGP), which settled at 77.50 cents/lb in January following a whopping 17.00 cent/lb increase.

News of the proposed 3.9% increase for February came on the heels of a drop in spot prices in recent days.

PGP for February delivery traded on Monday at 75.00 cents/lb, down from 75.50 cents/lb on 18 January. Meanwhile, PGP for January slid to 76.50 cents/lb, down from 78.00 cents/lb in the prior week.

The softening in the spot market could fuel resistance among buyers, particularly polypropylene (PP) producers, who saw their margins evaporate after monomer prices skyrocketed by nearly 30% in January.

“It may be difficult [to implement the 3.00 cent/lb increase] with spot PGP prices under the January contract pricing,” one market participant said.

Market sources said the same producer nominated a February price of 79.00 cents/lb for chemical-grade propylene (CGP) contracts, which were agreed at 70.00 and 74.00 cents/lb in January after a drawn-out and unusual split settlement.

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

At least two other US suppliers are expected to step out with price initiatives in the coming days.

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

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

($1 = €0.73)

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By: William Lemos
+1 713 525 2653



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