US spot propylene falls to 4.5-month low on increased supply

11 October 2013 22:25  [Source: ICIS news]

HOUSTON (ICIS)--US front month spot polymer-grade propylene (PGP) spot prices hit a 4.5-month low on longer supply and weaker demand, sources said on Friday.

Buyers and sellers said the most recent transaction for front-month PGP was done at 61 cents/lb ($1,345/tonne, €995/tonne) on 10 October. It was the lowest trade for front-month material since a deal done on 29 May at 59.5 cents/lb.

Sources said the drop in spot PGP, which shed an average of 2.625 cents/lb or 4.1% week on week, was mostly the result of softer demand and longer supply.

There is only one major US cracker down for unplanned maintenance, and the ongoing shutdown of the only propane dehydrogenation (PDH) unit was scheduled early enough to allow for inventory building, sources said.

Coupled with strong running rates at most US crackers, sources said propylene supply is starting to lengthen.

Downstream demand from the polypropylene (PP) market was said to be steady, but could decline on seasonal factors as well as a recent PP plant shutdown.

Additionally, refinery-grade propylene (RPG), a key feedstock for PGP through the propylene splitter model, has softened on weaker gasoline alkylation values.

However, supply of RGP is tightening on lower US refinery operating rates, but this is being balanced by weaker demand from the PGP and gasoline markets.

($1 = €0.74)

By: John Dietrich

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