09 January 2013 20:06 [Source: ICIS news]
HOUSTON (ICIS)--A US propylene producer has renominated its contract price for January and is now seeking a 14.50 cent/lb ($320/tonne, €243/tonne) increase, market sources said Wednesday, a move that comes on the heels of a surge in spot prices in the past few weeks.
The new initiative, which represents a 26% increase from the supplier’s initial 11.50 cent/lb proposed increase, puts its polymer-grade propylene (PGP) contracts at 72.50 cents/lb and chemical-grade propylene (CGP) contracts at 71 cents/lb.
The nomination would raise propylene contracts by 25% this month, as PGP contracts for December settled at 58 cents/lb and CGP contracts were agreed at 56.50 cents/lb, both up by 1 cent/lb.
A second US propylene producer, which makes only CGP, had nominated an increase of 13 cents/lb for January, but talk was heard in the market that the supplier is now seeking an increase of 13.50 cents/lb.
The sharp increases being sought for propylene in January come as spot prices surged in the past few weeks on the back of plant outages, including an unexpected shutdown at a propane dehydrogenation (PDH) plant in Texas in December.
The on-purpose propylene facility in Houston was restated this week.
PGP for January traded on Tuesday at 70 cents/lb, rising by 20% from deals done at 58.25-59.00 cents/lb in mid December.
January PGP was offered at 74 cents/lb on Wednesday with no bids.
US propylene contracts normally settle at the beginning of the month being negotiated, but the settlement process in January may take longer as buyers reassess their positions in light of the changes in the nominations.
US buyers might also not be in a hurry to settle amid hopes that spot prices will begin to weaken, given the restart of the PDH unit this week.
Major US producers of PGP and CGP include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell, PetroLogistics and Shell Chemical.
The main buyers include Dow Chemical, INEOS, Ascend Performance Materials and Total.
($1 = €0.76)
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