25 January 2013 19:27 [Source: ICIS news]
HOUSTON (ICIS)--A US propylene producer has nominated a 7 cent/lb ($154/tonne, €116/tonne) increase for February, market sources said on Friday, on the heels of a continued uptrend in the spot market.
The initiative represents a nearly 10% increase from the January contract settlement, which put polymer-grade propylene (PGP) at 73.00 cents/lb and chemical-grade propylene (CGP) at 71.50 cents/lb, both up by 15 cents/lb from December.
The nomination for February, one of two initiatives that are normally put forward in the US market, is above projections for next month, as some market participants have predicted an increase of around 5 cents/lb based on the latest deals in the spot market.
US propylene contracts tend to settle around 2-3 cents/lb above spot prices, which, based on PGP deals done this week at 75.25 cents/lb, would translate into an increase of just under 5 cents/lb for next month.
The expected increase in February will extend a run-up that began in September 2012 and during which propylene contract prices have risen by 45%.
The sharp uptrend stems from firm demand and supply restrictions, resulting from a spree of unplanned shutdowns and scheduled maintenance in the past few months.
US propylene contracts normally settle at the beginning of the month being negotiated.
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.
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