US propylene spot prices fall on stocks, upstream

Source: ICIS News

2018/11/10

HOUSTON (ICIS)--US propylene spot prices continued to trend lower, under pressure from higher inventories and lower upstream costs.

US polymer-grade propylene (PGP) was assessed on Friday at 45.00 cents/lb ($992/tonne), compared with 46.25-48.50 cents/lb in the previous week.

Propylene supply has increased after several months of a snug market, with inventories reaching a 2018 high point in early November.

Propylene production had been constrained amid propane dehydrogenation (PDH) outages in the summer and early autumn, autumn refinery turnarounds and an increased usage of light cracker feedstocks since early in 2018.

Refinery operating rates have recovered back to 90% after several weeks below that level as some facilities complete autumn maintenance activities.

The most recent PDH outage was resolved in early October, although that unit had a compressor trip in early November and late October.

Meanwhile, a drop in crude oil and propane values has lowered costs for propylene produced in refineries and PDH units.

Propane also can be used as a cracker feedstock, and lower costs could encourage an increase in its usage. Propylene production from crackers has been limited by an increased usage of ethane feedstocks amid tight cracker margins. Ethane produces the least amount of co-products.

An easing of propylene demand has further allowed supplies to build. Demand tends to slow late in the year due to downstream inventory reductions and due to the approaching winter being a slower season for some downstream sectors.

Major US propylene producers include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, Flint Hills Resources and Shell Chemical.