US spot PGP trades at five-month high on stronger feedstocks

08 August 2013 21:07  [Source: ICIS news]

HOUSTON (ICIS)--US polymer-grade propylene (PGP) traded at a five-month high on Thursday, following one of its upstream chemicals, sources said.

US front-month PGP traded at 67.00 cents/lb ($1,477/tonne, €1,108/tonne), its highest trade since a deal done at 69.25 cents/lb on 5 March.

The PGP trade follows a five-month high for refinery-grade propylene (RGP), which traded at 60.0 and 61.0 cents/lb during this week, its highest since a trade at 63.5 cents/lb on 7 March.

RGP can be used as a feedstock for PGP production through propylene splitters.

In addition to increasing RGP prices, other PGP feedstocks such as paraffinic naphtha and propane have also moved up in the past month.

Much of the increase in naphtha is coming from higher crude oil futures, pushed by supply concerns.

The increase in propane has been mostly supported by strong demand from overseas buyers, as well as a stronger energy market.

Spot PGP prices are also being supported by tight supply, both in PGP and in downstream polypropylene (PP).

The market tightness in PP has increased prices, allowing for upstream PGP producers to seek some of those margins.

Some sources expressed concern that the recent run-up in PGP will lead to pre-buying and a collapse in prices, similar to what happened in March and April of this year.

Then, US spot PGP prices fell by 11-12 cents/lb in two months, while contract prices fell by 16 cents/lb after reaching a 2013 high of 79 cents/lb in February.

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 = €0.75)

By: John Dietrich

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