US initial Feb propylene contracts settle up 6.5 cents/lb

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HOUSTON (ICIS)–US propylene contracts for February are beginning to settle at an increase of 6.5 cents/lb, a couple of participants confirmed late on Wednesday, although the agreement is not yet marketwide.

Some discussions are still ongoing at various increases of 5-8 cents/lb.

If fully accepted in the market, the price hike would put February polymer-grade propylene (PGP) at 48.0 cents/lb ($1,058/tonne) and chemical-grade propylene (CGP) at 46.5 cents/lb.

A significant increase in contract pricing has been expected, given the recent surge in spot prices amid tighter-than-anticipated supply.

Availability has been limited amid a couple of cracker turnarounds and unexpected production issues.

Some producers are also said to be short and looking for volumes in the spot market.

Front-month February PGP traded on Wednesday at 49.00 cents/lb, up from the last deals at 46.25 cents/lb in the previous week.

A full settlement for February contracts is pending further confirmation from market participants.

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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Above image: The chair is made of polypropylene, a major end use of propylene. Source: Nils Jorgensen/REX/Shutterstock