US January cumene moving toward record high on feedstocks

10 January 2013 22:02  [Source: ICIS news]

HOUSTON (ICIS)--The US cumene contract for January is moving up toward a record high, sources said on Thursday, tracking feedstock costs.

Formula-based contracts are expected to put the January settlement in the low-70s cents/lb on an FOB (free on board) basis, close to the record high of 75 cents/lb ($1,653/tonne, €1,273/tonne) seen in May 2011.

The main reason for the surge comes because of feedstock benzene hitting a record high of 5.16/gal in January.

Additionally, feedstock refinery-grade propylene (RGP) values are spiking into the mid-60s cents/lb level on tight supply.

“You’re going to have to base your January cumene on RGP that’s at least 60 cents/lb,” a cumene buyer said. “It’s going up.”

December cumene contract prices were assessed by ICIS at 64-66 cents/lb FOB.

When cumene reached its record high, RGP spot prices were above 90 cents/lb, and supply of cumene was tight because of several plant outages.

Currently, cumene supply is balanced, and operating rates are low, as downstream demand from the phenol-acetone sector is soft.

The downstream demand is picking up slightly on improved domestic activity in the construction and automobile sectors, downstream sources said.

However, operating rates at cumene and phenol-acetone plants are unlikely to rebound to high levels until spot demand picks up.

With US cumene and phenol being based on expensive benzene relative to other regions, sources said demand for US exports won’t improve any time soon.

Major US cumene producers include CITGO, Flint Hills Resources, Georgia Gulf, Marathon and Shell Chemical.

($1 = €0.77)

By: John Dietrich

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