HOUSTON (ICIS)--US April propylene contracts are expected to roll over or fall slightly on a steady spot market, sources said on Monday.
US spot polymer-grade propylene (PGP) traded at 68.375 cents/lb ($1,507/tonne) on 4 April, up from a trade done earlier in the week at 67.500 cents/lb.
That rebound in spot prices could lend support to an April PGP contract settlement at 70.5-71.5 cents/lb, compared with the March settlement at 72.0 cents/lb.
However, given the slight movement, a rollover is also in play, sources said.
Market players agreed that PGP demand has been largely steady, with polymer producers having healthy enough inventories to keep buying limited.
Polypropylene (PP) buyers are said to be on the sidelines, waiting for PP prices to come down before building inventories, which has passed the scenario onto the PGP market.
However, propylene sellers are said to have inventory levels low enough that they are not eager to sell at a severe drop.
There is some downward pressure on the US PGP market, stemming from feedstock refinery-grade propylene (RPG) spot prices shedding 3.75 cents/lb in the past two weeks on increased supply.
Sources said that the split between April PGP and chemical-grade propylene (CGP) contracts will almost certainly stay at its typical 1.5 cent/lb spread in favor of PGP.
This is because CGP demand and supply is described as balanced, with little ability to decline more than PGP.
Major US propylene producers include Chevron Phillips, Enterprise Products, ExxonMobil, LyondellBasell and Shell Chemical.
Major buyers include Ascend Performance Materials, Dow Chemical, INEOS and Total.