An initial settlement for US propylene contracts for February called for an increase of 16.5 cents/lb, 121-33-5 in agreement with market expectations, 452-86-8 market sources said Wednesday.

The settlement was not marketwide, some of the sources warned, citing at least one major producer who seeks an increase closer to 18 cents/lb.

The settlement priced February polymer-grade propylene at 72.5 cents/lb and chemical-grade propylene at 71 cents/lb. Propylene contracts previously settled for January at 56 cents/lb and 54.5 cents/lb, respectively.

At these levels, propylene contracts were at their highest since September 2011, when PGP was at 78 cents/lb and CGP was at 76.50 cents/lb before falling 14 cents/lb in October.

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.

Expectations of a 16- to 18-cent/lb increase on contracts surfaced over the past two weeks as spot prices for all three grades of propylene surged on the back of tightening supply, 494-99-5 ongoing turnarounds and, in the case of refinery-grade propylene, stronger alkylation values.

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