US May propylene contracts looking at little to no movement

07 May 2014 22:10  [Source: ICIS news]

HOUSTON (ICIS)--US May propylene contracts are expected to have slight or no movement when they settle, sources said on Wednesday.

Two producers have nominated a rollover, which would put polymer-grade propylene (PGP) at 71.0 cents/lb ($1,565/tonne) and chemical-grade propylene (CGP) at 69.5 cents/lb.

“If you look at where April spot prices were, a rollover makes the most sense,” a source said. “But there was one trade in early May which was slightly lower. So the question becomes, where do you put the weight?”

The source was referring to a trade for May PGP at 67.625 cents/lb on 1 May, which represented a drop of 0.875 cents/lb from the previous reported trade.

US propylene contracts often settle 2-3 cents/lb above the most recent spot activity.

Recent bid and offer levels for PGP have come down from the 68.5 cent/lb level, where the last trade for April was done.

“We should be down a penny in May,” another source said. “Really, it should be two.”

Market players said that propylene prices have been largely steady because supply and demand have been mostly in balance.

However, a producer said that demand from the polypropylene (PP) market has been improving, which could keep a floor on PGP prices heading into the summer months.

Propylene prices often increase in the summer months because of peak demand in the US construction market.

However, buyers have argued that with PGP 8 cents/lb higher year over year, prices are already too high.

Major US propylene producers include Chevron Phillips Chemical (CP Chem), Enterprise Products, ExxonMobil, LyondellBasell and Shell Chemical.

Major buyers include Ascend Performance Materials, Dow Chemical, INEOS and Total.

By: John Dietrich

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