US spread between RGP and PGP holding at wider levels

24 September 2013 22:58  [Source: ICIS news]

HOUSTON (ICIS)--The spread between front-month refinery-grade propylene (RGP) and polymer-grade propylene (PGP) continued to hold steady after two RGP trades on Tuesday.

Sources said September RGP traded at 57.50 cents/lb ($1,268/tonne, €938/tonne) and 57.75 cents/lb on Tuesday.

This kept the spread between RGP and PGP at 8.25-8.50 cents/lb, based on the most recent PGP trade at 66.00 cents/lb.

The RGP/PGP spread had narrowed for most of the second and third quarter, owing to weaker demand for RGP from the gasoline sector.

This meant more relative RGP demand came from the chemical sector, which kept RGP prices higher.

Additionally, RGP inventories have been lower year on year in 2013, leading sellers to more closely price materials to alkylation values, which have hovered in the high-70s to low-80s cents/lb level.

For most of the second and third quarter, the RGP/PGP spread was between 4.5-7.5 cents/lb, as PGP market dynamics could sustain a higher spread.

However, US spot PGP prices have held steady in the mid-60s since the start of August, while RGP prices have started to decline.

The two RGP trades on Tuesday represented a slight upward movement for prices, but market sources said a surge is not expected.

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 = €0.74)

By: John Dietrich

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