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US propylene contracts for April will likely rise by 15 cents/lb

April 18/2011

(ICIS) -- US propylene contracts for April will likely rise by 15 cents/lb (USD 331/tonne, EUR 228/tonne), market sources said on Friday, citing the initial contracts that have already settled at that level. The 20% increase, which stems from tight supply, puts polymer-grade propylene (PGP) at 87.50 cents/lb, topping the 85 cent/lb record settlement of July 2008. The 15 cent/lb jump puts chemical-grade propylene (CGP) at 86 cents/lb. According to sources, a number of contracts were agreed at those levels, but a full-market settlement was yet to be reached.

A significant April increase in propylene was widely expected because of sharply higher refinery-grade propylene (RGP) spot prices in recent weeks. Spot RGP is an indicator for trends on the contract side as the product accounts for around 60% of the US propylene market.

RGP for April was bid on Friday at 85 cents/lb, which is up from deals done at 71.50-72.00 cents/lb four weeks ago.

US producers had initially nominated increases of 15% for April propylene, but later withdrew the initiatives and pushed for a larger increase because of a continued uptrend in RGP.

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