06 June 2014 22:53 [Source: ICIS news]
HOUSTON (ICIS)--US June propylene contracts reached a full settlement, sources confirmed on Friday, pressured lower by longer supply.
US June propylene contracts shed 3 cents/lb ($66/tonne) from May, putting polymer-grade propylene (PGP) at 67.5 cents/lb and chemical-grade propylene (CGP) at 66.0 cents/lb.
The drop was more than most had expected, as spot PGP prices shed almost 2 cents/lb from the close of April.
“This price decline was about large inventories and a decreasing RGP [refinery-grade propylene] price,” a buyer said.
Spot prices for RGP, which can be used as a feedstock for PGP production, shed 5-6 cents/lb during that timeframe.
That put downward pressure on PGP and led the spot market lower by 1.5 cents/lb following the settlement of the June contract.
Sources said RGP has been falling on long supply, and that PGP inventories have started to lengthen as buyers continue to wait for the market to bottom out.
“I don’t know if there is enough additional demand to spur more buying at this point,” the buyer said. “I think there is another downward move in PGP next month.”
A US producer said it is hoping for better demand in June and July, as the US construction market starts to ramp up activity.
Major US propylene producers include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell and Shell Chemical.
Major buyers include Ascend Performance Materials, Dow Chemical, INEOS and Total.
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