29 June 2012 22:29 [Source: ICIS news]
HOUSTON (ICIS)--US propylene producers nominated a rollover and an increase of 3 cents/lb ($66/tonne, €53/tonne) for July, market sources said this week, predicting a flat settlement for next month.
According to sources, the rollover was proposed by a chemical-grade propylene (CGP) supplier, while the 3 cent/lb increase was nominated for CGP and polymer-grade propylene (PGP) contracts.
US PGP contracts for June settled at 52.00 cents/lb, falling by 15.50 cents/lb from May, while CGP contracts settled at 50.50 cents/lb, also down by 15.50 cents/lb.
US propylene contracts normally settle at the beginning of the month being negotiated.
Propylene spot prices were steady to lower this week, fuelling sentiment among buyers and other industry participants that a contract increase in July was unlikely.
Refinery-grade propylene for (RGP) for June traded this week at 37 cents/lb, down from 37.50 cents/lb a week earlier.
July RGP was also transacted at 37 cents/lb.
The softness in RGP is probably the result of continued ample supplies at US refineries, even though government data this week showed a small reduction in stockpiles.
US propylene inventories fell by 1.8% in the third week of June to 3.735m bbl, according to latest data from the Energy Information Administration (EIA), which put operating rates at US refineries at 92.6% of capacity last week.
The figure was the highest reported by the EIA since 93.6% in the week that ended on 27 July 2007.
PGP prices also softened slightly compared with a week earlier, but spot market activity was subdued.
PGP for August traded at 51.75 cents/lb mid week, down from deals done at 52 cents/lb in the prior week. No PGP deals for June were heard. PGP for July was heard offered at 52 cents/lb late in the week with no bids.
Propylene spot prices this week indicate the July settlement will fall within the initiatives being put forward by US producers.
A flat settlement could also indicate the US propylene market may have bottomed out after prices dropped in the last two months.
The US contract shed a combined 25.50 cents/lb in May and June.
($1 = €0.80)
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