Jump in US propylene to push epoxies, polyurethanes higher – Dow

02 February 2012 16:35  [Source: ICIS news]

HOUSTON (ICIS)--The recent spike in US propylene prices will lead to downstream increases, particularly in epoxy resins and polyurethanes, the chief executive of Dow Chemical said on Thursday.

Already, spot refinery grade propylene (RGP) was offered on Wednesday at 66.50 cents/lb with no bids. It traded at 39.50 cents/lb in the first week of January.

So far, producers have nominated increases of 17 cents/lb and 22 cents/lb for February propylene contracts.

US propylene prices should remain elevated through the early summer, said Andrew Liveris, Dow CEO. He made his comments during an earnings conference call.

The expected run-up is pressuring Dow to pass through the increases, especially in downstream polyurethanes, Liveris said.

"Epoxies will be challenged, though, because of operating rates in epoxies are not supporting strong price increases," he said. "That will be a headwind for us."

He added, "It will be tough margin, operating territory for the first half."

However, margins should begin expanding in the second half of the year, he said.

Spot propylene prices are increasing because alkylation values are also rising.

The increase in alkylation values resulted from higher gasoline prices and a sharp drop in isobutane prices, according to sources.

Refiners can use RGP and isobutane to make alkylate, a blendstock for gasoline.

Additional reporting by William Lemos

($1 = €0.76)

By: Al Greenwood
+1 713 525 2645

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