HOUSTON (ICIS)--US spot refinery-grade propylene (RGP) prices continued to strengthen on Tuesday on the back of tight supply and improving demand from the gasoline market.
March RGP traded at 63.25 cents/lb ($1,394/tonne) on Tuesday, up from previous trades at 63.00 cents/lb a week ago, which represented a jump of 2.5 cents/lb, sources said.
Spot RGP had spent most of February in the high-50s cents/lb before breaking into the 60 cents/lb level with several trades at 63 cents/lb in the last week of the month.
The run-up has come despite spot prices for downstream polymer-grade propylene (PGP) falling slightly.
This is because RGP supply is tightening and is expected to get tighter because of several refinery turnarounds.
US RGP inventories have fallen 12% in the past three weeks, according to the US Energy Information Administration (EIA), despite refinery operating rates climbing.
Another reason for supply tightness in RGP has been refiners starting to work towards making summer blends of gasoline rather than winter blends.
Gasoline demand is also starting to improve overall, as winter weather recedes in much of the US and the peak summer driving season nears.
The rise in RGP spot prices has not been able to lift PGP prices, as sources said that market continues to wait on the March contract settlement for direction.