19 October 2012 22:07 [Source: ICIS news]
HOUSTON (ICIS)--US propylene prices are expected to remain steady for the remainder of the year, market sources have predicted, despite continued increases in refinery-grade propylene prices (RGP) in the past few weeks.
Spot RGP for October delivery traded this week at 44.00 ($970/tonne, €747/tonne) and 44.25 cents/lb, rising from a deal done at 43.50 cents/lb a week earlier.
RGP prices are up by nearly 10% from an average of 40.25 cents/lb four weeks ago.
The increase stems from a continued drop in refinery-sourced propylene inventory levels, a market participant said.
US propylene inventories fell by 3.1% in the second week of October, marking the seventh reduction in as many weeks as reported by the Energy Information Administration (EIA).
The drop in inventory levels has lent support to RGP, but the increase in RGP prices has not led to significant changes in the cost of polymer-grade propylene (PGP), the price of which tends to set the floor for the contract settlement.
US PGP contracts normally settle 2 cents/lb above PGP spot prices.
No PGP transactions for October were heard this week, but October PGP was heard bid on Friday at 49 cents/lb against an offer at 53 cents/lb the previous day.
That compares with deals done at 50.25-50.75 cents/lb four weeks ago.
US propylene contracts normally settle at the beginning of the month being negotiated. Nominations for the November contract will likely emerge next week.
PGP contracts for October settled at 53.00 cents/lb, up by 1.50 cents/lb from September.
November PGP would probably settle at the same level based on bid and offers this week.
($1 = €0.77)
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