US propylene for June sheds 23%, contract hits 30-month low

07 June 2012 20:31  [Source: ICIS news]

LyondellBasell plant in Channelview TexasHOUSTON (ICIS)--US polymer-grade propylene (PGP) contracts for June on Thursday fell by 15.50 cents/lb ($342/tonne, €273/tonne) from May to hit a 30-month low.

June PGP contracts settled at 52 cents/lb on Thursday, a drop of roughly 23% from May and the lowest level since 49.50 cents/lb in November 2009.

The reduction, which put chemical-grade propylene (CGP) at 50.50 cents/lb, was the second in as many months as the US contract shed 10 cents/lb in May.

US propylene contracts had been widely expected to fall in June after spot prices cratered in recent weeks.

Refinery-grade propylene (RGP) for June traded at 36 cents/lb on Thursday, dropping by 40% from a month earlier and its lowest level since July 2009. 

Spot PGP for June delivery traded this week at 48.25-49.00 cents/lb, falling from 63 cents/lb in early May.

The downtrend in the US market stems from weaker demand and lower upstream crude oil and gasoline prices.

A weakening economic outlook, de-stocking and trader inventory liquidation also weighed on propylene spot prices in recent weeks, a market source said.

The slower economy and de-stocking were also cited as factors behind the latest slumps in US ethylene and butadiene (BD) contract prices.

BD contracts for June fell by around 27% to $1.07/lb, erasing nearly all of the gains in US prices since the start of the year. The drop was also the second in as many months.

Ethylene for May settled earlier this week at 46.25 cents/lb, dropping by 16% from April, on lower spot prices and reduced production costs.

The drop in May was the sharpest for a single month since ethylene fell by 9.50 cents/lb in November 2008 in the wake of the global financial crisis that year.

US ethylene contracts normally settle at the beginning of the month for the preceding month.

Propylene usually settles early in the month.

Major US producers of PGP and CGP include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell, Petrologistics and Shell Chemical.

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By: William Lemos
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