US propylene spot prices surge 2.8% on pre-buying

13 December 2013 22:27 Source:ICIS News

HOUSTON (ICIS)--US spot propylene prices increased 2.8% week on week, sources said Friday, following pre-buying and inventory building.

US spot PGP prices rose to 71.75-73.75 cents/lb ($1,582-1,626/tonne, €1,155-1,187/tonne).

Most market players were expecting higher PGP and polypropylene (PP) prices in January, and attempted to build inventories

However, producers were able to push spot prices higher and were aided by thin trading.

The surge could lead to higher prices as other PGP and PP consumers are forced to build inventories ahead of a possible increase in January propylene contracts.

Some sources said they expect January propylene contracts could increase by 6-7 cents/lb, while others were expecting a slightly lower increase on eventual weak demand.

Sources said that some supply concerns also boosted prices, while others said supply is readily available for buyers.

On the refinery-grade propylene (RGP) side, spot prices surged as supply was tight and one buyer was aggressively seeking material.

This increase put spot RGP for December at 62.00-62.50 cents/lb for the week, higher than the previous week’s spot price of 55.25 cents/lb.

Sources said the increase in spot RGP was not the result of stronger demand for PGP production.

Additionally, the tight supply lead to thin trading, which several sources said skewed the spot price higher.

The increase in spot RGP puts prices 25% higher year on year from the average of 49.75 cents/lb for the week ended 14 December 2012.

The run-up in propylene spot prices is atypical for December, as seasonally weaker demand and inventory concerns typically lead to an increase in selling and lower prices.

($1 = €0.73)
By John Dietrich