US spot PGP prices surge on stronger demand after July settlement

HOUSTON (ICIS)–US spot polymer-grade propylene (PGP) traded higher on Thursday following news of the July initial contract settlement.

Sources said two trades for July PGP were done at 66.25 cents/lb ($1,461/tonne) on Thursday, up from the previous reported trade at 65.25 cents/lb on 2 July.

Trading had been thin ahead of the July contract settlement, as US propylene contracts typically settle 2-3 cents/lb above recent spot trading.

Sources said buyers were waiting for a settlement before entering the market, as the July contract was expected to be the first in five months that did not settle at a decline.

“You can only go so long without buying,” a source said. “It’s possible sentiment is pushing up on prices.”

The rise in spot PGP mirrors an increase in feedstock refinery-grade propylene (RGP) and comes as polypropylene (PP) buyers are starting to restock inventories.

One source said that with late June representing the likely floor of the US PGP market, buying picked up and led to a surge in demand, but that buyers could retreat again.

A look at recent spot PGP prices prior to the most recent surge: