US propylene prices reach four-month highs, tracking crude surge

24 July 2013 22:52  [Source: ICIS news]

HOUSTON (ICIS)--US polymer-grade propylene (PGP) and refinery-grade propylene (RGP) spot prices reached 16- and 20-week highs on trades completed, although the reason for the surge remained unclear, sources said on Wednesday.

The most recent US front-month PGP spot trade was done at 64.000 cents/lb ($1,411/tonne, €1,072/tonne), its highest since trades were done at 65.375 and 65.500 cents/lb the week ended 22 March.

Front-month RGP most recently traded at 58.0 cents/lb, its highest since a trade at 63.5 cents/lb on 7 March.

“There has been an increase in buying interest,” a producer said. “But who knows why?”

There is some speculation that a recent surge in crude oil futures has pulled up propylene values.

West Texas Intermediate (WTI) futures ended Wednesday at $105.39/bbl, up by 9.1% from the settlement of $96.56/bbl on 28 June.

This has pushed up feedstock costs for paraffinic naphtha up by 7.8% in that same timeframe.

Additionally, feedstock propane costs have increased 13% in the past four weeks, while ethane has only increased by 8.3%, keeping ethane the preferred feedstock for steam crackers and tightening propylene supply.

Sources said propylene demand has been steady, although the producer said there have been more buyers in the market.

This could be an effort to build up inventories ahead of an expected feedstock-based increase in prices.

Major US propylene producers include Chevron Phillips Chemical, ExxonMobil, LyondellBasell, PetroLogistics and Shell Chemical.

Major buyers include Ascend Performance Materials, Dow Chemical, INEOS and Total.

($1 = €0.76)

By: John Dietrich

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