Weak demand weighs on US propylene, June contracts seen down

18 May 2012 21:18  [Source: ICIS news]

A refineryHOUSTON (ICIS)--US propylene contracts are probably headed for a significant drop in June, market sources said on Friday, citing weak demand and lower spot prices in recent weeks.

Polymer-grade propylene (PGP) for May traded this week at 53.00-54.75 cents/lb ($1,168-1,207/tonne, €923-954/tonne), down by around 10 cents/lb from the first week of May, indicating that contracts in June could potentially fall by at least the same amount.

Market sources said propylene spot prices are under pressure because of a drop in demand resulting from de-stocking downstream.

Propylene buyers are holding off taking in more volumes because of expectations that prices will continue to fall, a source said.

Falling crude oil prices, a weak economic outlook and trader inventory liquidation were also weighing on prices, another source said.

US propylene contracts usually settle at the beginning of the month being negotiated.

Nominations for June could emerge next week.

US propylene contracts for May fell by 10 cents/lb in a settlement that put PGP at 67.50 cents/lb and chemical-grade propylene (CGP) contracts at 66.00 cents/lb.

The 13% reduction in May was the first drop for the contract in 2012, as the monomer settled flat in April and January, but rose by around 40% in between with increases in February and March.

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By: William Lemos
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