Initial March settlements for US PGP fall 5 cents/lb

02 March 2011 23:10  [Source: ICIS news]

Initial March US PGP falls 5 cents/lbHOUSTON (ICIS)--Several US market participants have agreed to settle March polymer grade propylene (PGP) contracts at 72.5 cents/lb ($1,598/tonne, €1,167/tonne), a 5 cent drop from February, sources said on Wednesday.

However, some sellers were still pushing for a higher price than the initial settlement, a buyer said.

Initial chemical grade propylene (CGP) settlements were heard at 71.0 cents/lb, down from 74.0 cents/lb in February.

The CGP seller that settled separately at 70.0 cents/lb in February would move up to 71.0 cents/lb under the initial March settlement, sources said.

The initial settlements represent a more conservative decrease than many downstream market watchers had forecast.

Over the past week, polypropylene (PP) buyers and sellers cited expectations of a 5-10 cent/lb drop on March contracts.

US PP demand was hammered by a 17 cent/lb contract increase in January, with February US PP operating rates estimated to be lower than 70%.

Rising crude oil prices and surging international propylene markets appear to have lent support to US monomer prices and prevented a larger drop in March.

A refinery grade propylene (RGP) spot deal was heard at 66.75 cents/lb Wednesday, up from bids at 61.00 cents/lb earlier in the week.

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

($1 = €0.73)

For more on propylene, visit ICIS chemical intelligence
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By: David Barry
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