19 June 2013 17:04 [Source: ICIS news]
HOUSTON (ICIS)--US June propylene contracts remained unsettled but could reach a split settlement, sources said on Wednesday.
A buyer and seller each said that US June polymer-grade propylene (PGP) contracts could increase by 3 cents/lb ($66/tonne, €50/tonne) while chemical-grade propylene (CGP) contracts could increase by 2 cents/lb.
“The market is talking about splitting,” a buyer said. “It’s a mess right now.”
If the split settlement occurs, it would be the first since March 2011, when PGP contracts fell by 5 cents/lb and CGP contracts fell by 1 cent/lb.
A June split settlement would widen the gap between US PGP and CGP contracts to 2.5 cents/lb, its widest since a 5.5 cent/lb gap in January and February 2011.
Currently, US May PGP contracts are at 62.0 cents/lb and May CGP contracts are at 60.5 cents/lb.
Market sources said US PGP contracts are supporting a 3 cent/lb increase because demand has rebounded from the polypropylene (PP) market.
Additionally, recent spot deals for PGP have been done at 63.250 and 63.375 cents/lb, supporting the 3 cent/lb increase.
However, demand for CGP and its derivatives is not as strong, pushing buyers to hold out for a smaller increase.
Another possibility would be a two-month settlement for US propylene contracts, but a producer said that was unlikely.
Major US producers of CGP and PGP include Chevron Phillips Chemical, ExxonMobil, LyondellBasell, PetroLogistics and Shell Chemical.
Major buyers include Ascend Performance Materials, Dow Chemical, INEOS and Total.
($1 = €0.75)
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