27 March 2013 20:29 [Source: ICIS news]
HOUSTON (ICIS) – US April propylene contracts are expected to fall on softer demand and lower spot price values, sources said on Wednesday.
Buyers and sellers said they expect an April settlement at a decrease of 6-7 cents/lb ($132-154/tonne, €103-120/tonne), but the fall could be steeper.
“It’s looking as though contracts should move into the mid-60s [cents/gal],” a market player said. “But there’s still time for prices to come down.”
Currently, US March polymer-grade propylene (PGP) contracts are at 73.0 cents/lb and chemical-grade propylene (CGP) contracts are at 71.5 cents/lb.
Sources said the expected downturn in April contracts is mostly tied to US spot prices for PGP dipping by 9-11 cents/lb since the March settlement.
This fall has been mostly pushed by US polypropylene (PP) producers sitting on inventories and staying out of the market.
“Once the PP guys don’t like the price, they take their ball and go home,” a propylene producer said. “That’s what they’re doing now.”
However, several traders said they could see the April fall being less than 6-7 cents/lb if spot PGP rebounds slightly in the last week of March.
The US propylene contract is typically settled at the start of the month for the same month.
Major US producers of PGP and CGP include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell, Petrologistics and Shell Chemical.
The main buyers include Ascend Performance Materials, Dow Chemical, INEOS and Total.
($1 = €0.78)
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