13 August 2013 22:06 [Source: ICIS news]
HOUSTON (ICIS)--US August propylene contracts reached a full settlement for polymer-grade propylene (PGP) and chemical-grade propylene (CGP), sources confirmed on Tuesday.
US PGP and CGP contracts for August gained 5 cents/lb ($110/tonne, €83/tonne), in line with nominations and market expectations.
This puts August PGP contracts at 70.0 cents/lb and CGP contracts at 68.5 cents/lb.
Sources said PGP contracts were quicker to reach a settlement as some CGP buyers pushed for a smaller increase.
However, a producer said there was little momentum for a smaller CGP settlement as feedstock costs were the big driver rather than demand.
US propylene feedstock costs have increased since the start of July, mostly because of a rally in global crude oil futures.
Although ethane remains the favoured feedstock for most US crackers, its low propylene yields have offset its continued low costs.
The higher feedstock costs combined with some tight supply to push US spot PGP and refinery-grade propylene (RGP) spot prices to five-month highs during the week ended 9 August.
PGP traded at 67 cents/lb on 8 August and 68 cents/lb on 12 August as contracts started to initially settle.
US propylene contracts often settle at the start of the month at 2-3 cents/lb above recent spot trades.
The increase in August propylene comes despite the month, typically seeing a decline, owing to weak demand, sources said.
A year ago, August propylene settled at 50.5 cents/lb, the low for 2012.
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)
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