March IPA contract values weaken on soft market conditions

29 March 2013 21:40  [Source: ICIS news]

HOUSTON (ICIS)--US isopropanol (IPA) contract values fell by 3 cents/lb ($66/tonne, €52/tonne) for March, sources confirmed on Friday.

Weak fundamentals, including oversupply and weak demand, pressured IPA prices lower despite a 6 cent/lb rise in February feedstock chemical-grade propylene (CGP).

CGP reversed direction for March, falling by 6 cents/lb, and is expected to weaken similarly again in April.

The IPA decline took contract prices to a new range of 92-93 cents/lb, as assessed by ICIS.

Several market sources expect IPA prices to drop by as much as another 6-8 cents/lb in early April on strong downward sentiment and soft market conditions, but only one reduction of that magnitude had surfaced so far.

IPA supply was short earlier in the first quarter, but supply has lengthened on the prospect of lower pricing, which has stymied sales and runs counter to producers’ efforts to sell higher-priced inventory.

Economic signals from the home-building and home-buying markets have been mixed.

Although there have been recent positive indications, US pending home sales edged down by 0.4% in February from January. In its monthly report, the National Association of Realtors (NAR) said its pending home sales index (PHSI) saw its third decline in the last four months.

Despite the long-awaited US housing recovery appearing to take hold, new-home construction is sputtering because it is being deprived of credit fuel and facing uphill materials and labour costs, sources said.

Among feedstock, the US April propylene contract is trending down by at least 6-7 cents/lb from March on softer demand and lower spot price values, sources said, but the fall could be steeper.

On the US truck acetone front, March prices continued to trend lower on weaker propylene, though supply continues to be constrained by reduced phenol production. Barge and truck prices for March settled down by 5 cents/lb and 6 cents/lb, respectively.

US IPA suppliers include Shell Chemical, LyondellBasell, ExxonMobil, Haltermann and Sasol.

($1 = €0.78)

By: Larry Terry
1 713 525 2653

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