LONDON (ICIS)--European propylene supply remains tight but trades recorded this week have shown a softening in spot price premiums against the contract reference price, sources said on Friday.
Propylene availability has been constrained through light feedstock cracking, planned cracker and refinery maintenances and, more recently, restrictions on refinery operating rates because of high temperatures.
Sources said there had been little to no distinction in price between chemical grade propylene (CGP) and polymer grade propylene (PGP) on the inland market in particular.
Double-digit premiums for PGP were widely talked for June volumes with several deals concluded at contract price plus 10%. Higher premiums were also mentioned by sources.
This week though, possibly with an eye on the soon-to-be-complete planned cracker maintenance slate and not least with affordability a big issue for many derivatives following a big hike in the contract price for June, double-digit premiums were generally being avoided.
Certainly, deals reported by players this week have clearly indicated premiums of around 6-8% against a rolled over July contract reference price.
Sources hope that the tight supply continues to ease through July, with immediate spot needs already having been covered this week.
While they are hoping for a better balance overall, this week there has been a fresh cracker issue and, together with high temperatures that are expected to persist, there could be ongoing constraints – with double-digit premiums potentially re-emerging.
Certain players continue to investigate import opportunities in order to cover some shortfalls in the near- to medium-term, but say it is difficult to organise from both a pricing perspective as well as logistically.
Follow Nel Weddle on Twitter