HOUSTON-US propylene producers nominated sharp increases for January, market sources said on Thursday, citing proposed increases of 14.50 cents/lb ($320/tonne, 243/tonne) and 15.00 cents/lb.
The initiatives represent an increase of around 25% from December, as chemical grade propylene (CGP) settled at 59.00 cents/lb and polymer grade propylene (PGP) at 60.50 cents/lb.
According to sources, two initiatives were put forward in recent days. A third US producer was yet to step out with its nomination.
US propylene contracts were widely expected to rise in January, following a 40% surge in refinery grade propylene (RGP) spot prices in the past four weeks.
RGP for December traded on Monday at 68.00 cents/lb, up from 48.00 cents/lb in the last week of November.
PGP spot prices also surged in December, gaining nearly 13 cents/lb after trading at 58.25 cents/lb in the last week of November.
PGP for December traded at 65.00 cents/lb in the first week of the month. The product was heard bid at 71.00 cents/lb in recent days.
Market sources have pointed to tight supply and cracker outages as the drivers behind the increase in propylene spot prices, including a disruption at Shell s GO-1 Norco cracker in Louisiana.
The company shut down the 558,000 tonne/year unit in the last week of November after a steam line ruptured.
Shell declared force majeure (FM) on propylene as a result of the outage, setting the restriction at 85%, according to sources.
The company was in the process of restarting the unit this week, but a buyer said the outage had limited supply of CGP in December, forcing buyers of that grade of propylene to look for material on the PGP side.
US propylene contracts usually settle at the beginning of the month being negotiated.
Market participants have predicted producers would likely get most of their proposed increases, which would send PGP back to the mid 70.00 cents/lb.
"It will be as high as the highest number in the past two years," a source said, referring to the contract price in April 2010, when PGP settled at 75.50 cents/lb.
Major US producers of PGP and CGP include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell, Petrologistics and Shell Chemical.
The main buyers include Dow Chemical, INEOS, Ascend Performance Materials and Total.
($1 = 0.76)
The initiatives represent an increase of around 25% from December, as chemical grade propylene (CGP) settled at 59.00 cents/lb and polymer grade propylene (PGP) at 60.50 cents/lb.
According to sources, two initiatives were put forward in recent days. A third US producer was yet to step out with its nomination.
US propylene contracts were widely expected to rise in January, following a 40% surge in refinery grade propylene (RGP) spot prices in the past four weeks.
RGP for December traded on Monday at 68.00 cents/lb, up from 48.00 cents/lb in the last week of November.
PGP spot prices also surged in December, gaining nearly 13 cents/lb after trading at 58.25 cents/lb in the last week of November.
PGP for December traded at 65.00 cents/lb in the first week of the month. The product was heard bid at 71.00 cents/lb in recent days.
Market sources have pointed to tight supply and cracker outages as the drivers behind the increase in propylene spot prices, including a disruption at Shell s GO-1 Norco cracker in Louisiana.
The company shut down the 558,000 tonne/year unit in the last week of November after a steam line ruptured.
Shell declared force majeure (FM) on propylene as a result of the outage, setting the restriction at 85%, according to sources.
The company was in the process of restarting the unit this week, but a buyer said the outage had limited supply of CGP in December, forcing buyers of that grade of propylene to look for material on the PGP side.
US propylene contracts usually settle at the beginning of the month being negotiated.
Market participants have predicted producers would likely get most of their proposed increases, which would send PGP back to the mid 70.00 cents/lb.
"It will be as high as the highest number in the past two years," a source said, referring to the contract price in April 2010, when PGP settled at 75.50 cents/lb.
Major US producers of PGP and CGP include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell, Petrologistics and Shell Chemical.
The main buyers include Dow Chemical, INEOS, Ascend Performance Materials and Total.
($1 = 0.76)
