HOUSTON (ICIS)--US February propylene contracts fully settled down slightly, sources said on Friday, tracking a drop in spot prices.
Buyers and sellers confirmed a 1 cent/lb ($22/tonne) drop for contracts, putting polymer-grade propylene (PGP) at 73.5 cents/lb and chemical-grade propylene (CGP) at 72.0 cents/lb.
The decline was less than expected, as market sources were projecting a fall of 1.5-2.0 cents/lb at the start of February.
However, a producer said the decline was softened somewhat because the weakness in spot pricing was mostly driven by traders taking positions, rather than supply/demand fundamentals.
Spot PGP prices often set the range of discussion for propylene contract prices, with contracts settling 2-3 cents/lb above recent spot transactions.
When nominations for February propylene came out, they were for an increase of 1 cent/lb and 2 cents/lb, respectively.
Once early February hit, however, sources said traders aggressively sold material, leading to spot prices shedding 2-3 cents/lb.
Spot prices were also weakened by softer demand, as PGP and polypropylene (PP) prices were nearing demand-destruction levels, leading to some increased inventory building.
This was expected to allow PGP and PP buyers to retreat from the market and wait for lower prices.
Major US propylene producers include Chevron Phillips Chemical, ExxonMobil, LyondellBasell, PetroLogistics and Shell Chemical.
Major buyers include Ascend Performance Materials, Dow Chemical, INEOS and Total.