US December propylene fully settles at 4 cent/lb increase

09 December 2013 17:37  [Source: ICIS news]

US propylene up 4 cents/lbHOUSTON (ICIS)--US December propylene contracts have fully settled at an increase, sources confirmed on Monday.

Buyers and sellers said December contracts gained 4 cents/lb ($88/tonne, €64/tonne), tracking a rise in spot prices in late November.

The settlement puts December polymer-grade propylene (PGP) contracts at 70.5 cents/lb and December chemical-grade propylene (CGP) contracts at 69.0 cents/lb.

A run-up in spot PGP in late November was mostly fuelled by consumers looking to build inventories ahead of expected price increases to start 2014, sources said.

However, the stronger demand pushed higher prices to hit the market sooner than expected, which could lead to a smaller-than-expected rise to start the new year.

A similar dynamic was taking place in the downstream polypropylene (PP) market, sources said.

Players in the propylene and PP markets were expecting a rise in prices to start 2014 on tighter supply and recent precedent.

“Prices have gone up in January in the past three years,” a propylene producer said. “That’s one reason everyone thinks they’ll go up again.”

Demand should also be improved to start 2014 as year-end inventory control measures are eased.

Most market players are expecting 2014 to show some growth over 2013, but others are remaining cautious.

US propylene contracts typically settle at the start of a month for that month.

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

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

($1 = €0.73)

By: John Dietrich

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