US Feb propylene contract talks ongoing, set to rise

Tracy Dang

17-Feb-2017

HOUSTON (ICIS)–US propylene contracts for February have yet to settle as of publication time on Friday, but most price discussions currently centre around targeted increases of 6-7 cents/lb, as supply remains on the tighter side.

Producer nominations have emerged at various price hikes of 6-8 cents/lb from the January settlement of 41.5 cents/lb ($915/tonne) for polymer-grade propylene (PGP) and 40.0 cents/lb for chemical grade propylene (CGP).

While buyers acknowledge that availability is somewhat limited by ongoing cracker turnarounds and recent production issues, they argue that overall supply is far from constrained.

Data from the US Energy Information Administration (EIA) showed that propylene inventories have declined for seven consecutive weeks, but stockpiles remain up 3.5% year on year.

Front-month PGP spot prices have surged by more than 20% since trading in the high 30s cents/lb in early January.

Nevertheless, sources said that the run-up is mostly a result of some producers looking to buy volumes to cover supply shortfalls.

Demand has increased somewhat as downstream markets are building inventories ahead of spring turnarounds. However, sources said there has not been a significant jump in consumption levels to merit the spot price surge, pointing to recent trades in the low 40s cents/lb, which were said to be direct deals from producers to consumers.

Major US propylene producers include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, Flint Hills Resources and Shell Chemical.

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

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