US spot PGP/RGP spread widens on differing demand patterns

19 November 2013 23:19  [Source: ICIS news]

HOUSTON (ICIS)--The spread between front-month polymer-grade propylene (PGP) and refinery-grade propylene (RPG) widened on Tuesday as demand levels for each moved in opposite directions, sources said on Tuesday.

Sources said the latest front-month deal for November PGP was done at 64.875 cents/lb ($1,430/tonne, €1,058/tonne), while the latest November RGP deal was done at 54.750 cents/lb.

This puts the spread at more than 10 cents/lb for spot prices, and widens the spot RGP/contract PGP spread to 12-13 cents/lb.

The spot spread had been steady between 6-8 cents/lb for most of the third quarter.

Sources said spot PGP prices have been climbing on pre-buying ahead of expected surges in pricing at the start of 2014.

The surge is expected to be supported by the start of the US cracker turnaround season, as well as boosted demand from the polypropylene (PP) market as buying activity picks up after year-end taxes are assessed.

Meanwhile, front-month RGP has been falling on aggressive selling and weaker demand, mostly from the gasoline market.

Gasoline demand has fallen, mostly on seasonal factors, and alkylation values for refineries has declined to the low-60s cents/lb.

However, RGP inventories are still too high for sellers to get full alkylation values, sources said.

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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