US September propylene contracts fully settled at a rollover

HOUSTON (ICIS)–US September propylene contracts fully settled at a rollover on Friday, sources said, tracking tighter supply and steady demand.

Sources confirmed that September polymer-grade propylene (PGP) was settled flat at 72.5 cents/lb ($1,598/tonne) and September chemical-grade propylene (CGP) was done at 71.0 cents/lb.

The rollovers were in line with market expectations, although one producer nominated its September contract for a 1 cent/lb increase, and another nominated a rollover.

Prices were expected to roll as spot PGP prices have been largely steady in thin market trading since the August propylene settlement.

With contract PGP often settling 2.0-3.0 cents/lb above recent spot trades, three September PGP deals on Thursday at 69.5 cents/lb supported the rollover.

Spot PGP trading has been thin because of tight supply, stemming from several cracker shutdowns and from lower levels of feedstock refinery-grade propylene (RGP).

Availability of RGP is lessening because of several refinery turnarounds, as well as the seasonal shift in focus to production of distillate rather than gasoline.

As a result, sources said RGP bids have risen 2-3 cents/lb during the week despite the lack of fresh offers, lending support to current spot PGP levels.

Spot PGP has not risen, however, because spot RGP remains at a steeper-than-normal discount of 10-12 cents/lb to spot PGP.

Additionally, US propylene contracts are 2.5 cents/lb higher year on year, despite mostly flat demand and better supply year on year.

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

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