January propylene contract prices are expected to rise 5 cents/lb on higher spot prices, industry sources said Friday.
First-quarter supply constraints and pre-buying of polypropylene were cited as factors supporting spot PGP prices, market sources said.
“Deals are taking place above the contract levels and producers have a tendency of announcing increases 2-cents above the latest deal” a source with propylene buyer said. “We are expecting stronger January pricing and a nomination of 75 cents/lb would be unwanted but not surprising,” the large buyer said. Polymer grade propylene last traded Tuesday at 71.75 cents/lb and 73.50 cents/lb for December deliveries.
US polymer-grade and chemical-grade propylene contracts increased by 4 cents/lb in December, pressured by tightening supplies of spot material. December PGP settled at 70.5 cents/lb, while CGP closed at 69 cents/lb.
US propylene contracts are settled on a monthly basis between major producers and buyers. The process includes price nominations by producers and subsequent negotiations with customers.
In spot markets, December PGP was heard offered at 74 cents/lb Mont Belvieu-pipeline basis, while January PGP was heard bid at 72 cents/lb Mont Belvieu-pipeline and offered at 73.75 cents/lb Mont Belvieu-pipeline.
Platts last assessed US PGP on December 6 at 70.75-71.25 cents/lb delivered. The assessment is at its highest since it reached 74.50-75 cents/lb delivered on February 8, Platts data show.