US propylene market trending up ahead of settlement

HOUSTON (ICIS)–US spot propylene prices have been trending higher in the first half of October, ahead of the October contract settlement.

Spot refinery-grade propylene (RGP) was done Monday at 19 cents/lb ($419/tonne) via railcar, up from a deal at 17 cents/lb a week ago.

Spot bid levels for polymer-grade propylene (PGP) have also firmed in the 28.5 cents/lb level, compared with the previous confirmed deal at 28.0 cents/lb in early October.

When September PGP contracts settled, spot PGP prices were slightly below the 28.0 cents/lb level.

This has led to some talk that October contracts could increase or settle at a rollover, sources said.

When the initial nominations – for a rollover – for October propylene contracts came in at the start of the month, spot prices were at 27 cents/lb.

At that point, sources said they were expecting a decline in October contracts.

The recent rebound, which comes as crackers have been heard to be shifting their feedslate to lighter feeds, could reverse the direction of the October settlement.

Spot PGP prices are also receiving support from the RGP market, which is moving up on several refinery turnarounds lowering supply.

However, sources said that continued high propylene inventories will likely cap any significant upward movement in spot propylene.

September PGP contracts were done at 30.0 cents/lb, and September chemical-grade propylene (CGP) contracts were done at 28.5 cents/lb.

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

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

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