Global propylene demand to grow 61% by 2025 – US consultant

26 January 2012 22:09  [Source: ICIS news]

HOUSTON (ICIS)--Global propylene demand will increase by around 61% in the coming years, US-based consulting firm Nexant said on Thursday, attributing the growth mostly to strong derivative demand from developing regions in Asia.

Nexant expects global propylene demand to reach 132m tonnes in 2025, rising by 50m tonnes from 2011 levels.

The expected increase will come even though propylene demand growth will gradually slow down, the group said in a new study.

Global monomer consumption in 20152025 will grow at an average 2.9%/year, down from 3.8%/year in 20052015, Nexant said.

Propylene supply tightness will continue to lend support to prices, Nexant said, citing a decline in US monomer production as a result of the growing use of light feedstocks at US crackers.

"Further decreases in the amount of propylene produced in North America will only serve to push prices higher and further tighten supply," the group said.

The US will have the highest-priced propylene in the world, Nexant predicted, adding, however, that the use of emerging technologies, such as propylene from biomass, and increased on-purpose production may help alleviate the situation.

The projection by the consulting group followed news a day earlier that a US producer had nominated a 40% increase for its contracts in February.

The nomination, which represents a 22 cent/lb ($485/tonne, €369/tonne) increase from January, could take US polymer-grade propylene (PGP) contracts in February to 78 cents/lb.

US propylene contracts had been expected to rise significantly in February on support from higher alkylation levels, which are climbing because of a drop in iso-butane values and higher gasoline prices.

However, an analyst downplayed the proposed 22 cent/lb increase, saying contracts will likely rise by half that amount.

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

($1 = €0.76)

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By: William Lemos
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