Market and product

HOUSTON (ICIS)--US methyl isobutyl ketone (MIBK) contract pricing for January will rise on upstream feedstock pressure, sources said on Monday.

MIBK price-hike initiatives ranged from 5-8 cents/lb ($110-176/tonne, €83-132/tonne).

A 40% surge in refinery grade propylene (RGP) spot prices in the past four weeks was cited as a major reason for the MIBK price push.

Propylene producers want to increase January contract prices by 14.50-15.00 cents/lb, following a 3 cent/lb gain in December. Propylene supply is constrained as one producer remained on 85% allocation after a disruption at one of its crackers.

Feedstocks isopropanol (IPA) and acetone remained flat for December, but were expected to strengthen on propylene values.

Further upstream, NYMEX crude futures have been trending upward, hitting a 26-month high of $92.58 on 3 January.

MIBK prices last increased in April on similar market dynamics, and the market still is being driven by raw materials rather than demand, sources said.

MIBK would follow its feedstocks, one buyer said. Market participants anticipated little or no market volatility in the early part of the new year and continued slow market recovery.

However, a producer reported heavy buying in December ahead of potential hikes, which could weaken price momentum for January or at least prolong negotiations.

A buyer agreed, saying it was not sure the initiatives would be fully accepted. Sources said a broad settlement at plus 5 cents/lb was likely.

Despite several attempts to raise prices during second-half of 2010, US MIBK contract values remained stable, and were assessed by ICIS at 102-103 cents/lb.

US MIBK suppliers include Dow Chemical, Sasol, Eastman, Celanese and Haltermann.