04 March 2013 18:10 [Source: ICIS news]
HOUSTON (ICIS)—US March propylene contracts are expected to fall because of improving supply and weakening downstream demand, sources said on Monday.
Market sources said they were hearing that US producers have nominated March contract decreases of 5 cents/lb ($110/tonne, €85/tonne) and 6 cents/lb.
The 5 cent/lb reduction would be for chemical-grade propylene (CGP), while the 6 cent/lb nomination would be for polymer-grade propylene (PGP).
The March propylene contract is trending lower on dropping spot prices, particularly for PGP, as supply has improved as a result of several cracker restarts.
US PGP spot prices have fallen by 6.50-7.75 cents/lb over the past four weeks.
Additionally, demand has softened, since downstream polypropylene (PP) producers have built up inventories and are pushing for a steep drop in the contract price.
In February, US PGP contracts settled at 79 cents/lb in the middle of the month, then saw spot material done in the mid-60s cents/lb later that day, frustrating buyers.
March PGP was traded at 70.0 and 70.5 cents/lb on Monday, slightly higher than deals for February PGP the previous week at 70 cents/lb.
Typically, the US propylene contract is settled at the beginning of the month for the month being negotiated.
Major US producers of PGP and CGP include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell, PetroLogistics and Shell Chemical.
Major buyers include Dow Chemical, INEOS, Ascend Performance Materials and Total.
($1 = €0.77)
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