US December propylene contracts fully settled down 10 cents/lb

HOUSTON (ICIS)–The US December propylene contract reached a full settlement, sources said on Wednesday, down 10 cents/lb ($220/tonne).

The drop puts December polymer-grade propylene (PGP) at 61.5 cents/lb and chemical-grade propylene (CGP) 60.0 cents/lb.

Two producers previously made separate nominations for a fall of 4 cents/lb, but spot prices continued dropping and pushed the settlement lower.

The decline puts propylene contracts at their lowest since sitting at 58.0 cents/lb and 56.5 cents/lb in December 2012.

Prices have come down 15 cents/lb from the October settlement, tracking plunging global energy markets.

In addition to lowering feedstock costs in the US, plunging energy values overseas have made propylene derivatives in other regions more competitive with US product.

This has led to a strong decline in demand for US propylene, as derivative producers are struggling to export their products.

Propylene supply in the US has also been boosted recently, with several cracker restarts in November and early December.

Sources said that the US cracker feedslate has also been shifting slightly heavier, as propane and butane prices have fallen faster than ethane and fallen faster than co-products.

Sources said US propylene prices could continue to fall, as even with thin trading activity, spot PGP offer levels have fallen around 2-3 cents/lb from early December.

US propylene contracts typically settle in the first half of the month for that month.

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

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