US Dec propylene contracts looking steady

HOUSTON (ICIS)–US December propylene contracts are expected to settle with little movement, sources said on Thursday.

December contracts for polymer-grade propylene (PGP) and chemical-grade propylene (CGP) were nominated to increase 1 cent/lb ($22/tonne) by separate producers.

However, spot PGP prices have been firmly between 29-30 cents/lb in early December.

This has pushed some in the market to expect a rollover from November or an increase of as much as 0.5 cents/lb.

The previous upward momentum for propylene was coming from tightening supply, as crackers were making less PGP and CGP.

This was because ethane was reclaiming its position as the preferred feedstock compared with propane and butane, which were favoured for much of 2015.

Propylene demand is also likely to start declining in December on seasonal factors, even as downstream sectors remain tight, necessitating more production and therefore consumption of propylene.

Propylene inventory levels have been described as adequate but tightening heading into year-end tax assessments and a heavy Q1 turnaround season.

This could lead to a surge in propylene pricing in January, but has not been seen in December.

November PGP contracts settled at 31.5 cents/lb and CGP contracts settled at 30.0 cents/lb.