Spot prices for January-February RGP up 32% from first week of January to US$0.52/lb. for railcar delivery on gains in alkylation values; increase likely to lend added support to higher prices for February PGP contract prices

Alison Gallant

Alison Gallant

Jan 18, 2012 – Industry Intelligence

LOS ANGELES , January 18, 2012 () – Spot prices for refinery-grade propylene shot higher on the back of gains in alkylation values, ICIS news reported Jan. 18, citing market sources.

January-February RGP was up 32% from a pipeline deal done the first week of January to 52 cents per pound for railcar delivery.

A bid for January RGP came in at 48 cents/lb. pipeline on Jan. 17 but no sellers showed interest, ICIS reported.

Alkylation prices increased to almost 52 cents/lb. in the week ended Jan. 13 from late December's 40 cents/lb. on the back of higher prices for gasoline and lower iso-butane prices. ICIS noted that alkylation prices have an effect on propylene prices because refiners can use RGP to make alkylate in gasoline or sell it to the chemical industry, depending on where they can get a better deal.

The increase in RGP will likely lend more support to an anticipated rise in polymer-grade propylene contract prices for February. Offers for January PGP came in at 59 cents/lb. Jan. 16, but were met with no bids while offers for first-quarter PGP came in at 62 cents/lb. and they were also met with no bids. In the first week of January, PGP deals were done at 54 cents-56 cents/lb., ICIS reported.

The January contract for U.S. PGP rolled over at 56 cents/lb. in the week ended Jan. 13.

A busy turnaround schedule in the U.S. olefins industry in the next few months as well as a rebound in the upstream energy markets also lent support to propylene pricing.

Price increases in February for the monomer could range from 2 cents-4 cents/lb. to 10 cents/lb. due to recent increases in alkylation prices as well as a possible uptick in demand in the next several weeks, market sources told ICIS.

The primary source of this article is ICIS news, Sutton, England, Jan. 18, 2012.

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