US IPA contracts fall 6 cents/lb in June on lower feedstock

15 June 2011 23:03  [Source: ICIS news]

HOUSTON (ICIS)--US isopropanol (IPA) contract values slipped during the first half of June on weakening propylene prices as sellers sought to move current inventory before IPA values potentially fell lower, sources said on Wednesday.

IPA, a solvent used in coatings, inks and pharmaceuticals, slipped by an average of 6 cents/lb ($132/tonne, €91/tonne) to a contract range of $1.06-1.09 cents/lb DEL (delivered), as assessed by ICIS.

Buyers reported price cuts of 4-8 cents/lb for June on sentiment about feedstock chemical-grade propylene (CGP).

Sellers neither commented on their outlook for July CGP, nor specified the level of their price concessions, but one supplier said it was “being competitive with other producers who are adjusting their IPA prices downward”.

Although US propylene inventories fell in the second week of June along with a drop in operating rates at US refineries, IPA buyers said they expected feedstock CGP to weaken again in July on longer supplies, but much less than its 15 cent/lb plunge in June.

CGP prices rose sharply in April and May.

Feedstock values in a given month typically affect the following month’s IPA pricing, but “I don’t think suppliers could wait until July”, a buyer said. “With the anticipation of IPA decreases, it was necessary to move existing inventory as soon as possible.

“Now that the decrease in propylene turned out to be much greater than that which was expected,” the IPA buyer added, “we should see another wave of decreases – maybe before the end of June.”

One supplier, however, expressed some frustration, saying producers allowed buyers to drag the price down and force one-off decreases, even though producers paid record-high prices for May feedstock and should have postponed price reductions until July.

($1 = €0.69)

For more on isopropanol, visit ICIS Chemical Intelligence

By: Larry Terry
1 713 525 2653

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