HOUSTON (ICIS)--US propylene spot prices were steady as strong production offset upward pressure from higher demand and higher upstream costs.
US polymer-grade propylene (PGP) spot prices were assessed on Friday at 36.75 cents/lb ($810/tonne), steady with the prior week.
Propylene prices began falling in late 2018 amid improved production, lower upstream costs and as year-end de-stocking had hampered demand.
Demand has rebound amid downstream re-stocking and as lower propylene costs have encouraged interest in US derivative exports. Upstream crude oil and propane cost have increased in early 2019, adding additional upward pressure.
However, propylene production from refineries, crackers and other sources remains strong and the market remains well-supplied. Inventory levels, which were at multi-year highs in late 2018, continued to build in early January.
Refinery rates have been high amid strong demand for US fuel exports, particularly to Mexico. Rates are expected to remain high amid new regulations for bunker fuels which should increase demand for diesel fuel.
Production from crackers has been strong amid an increase in usage of heavier cracker feedstocks and the recent start-up of a previously idled cracker in Louisiana.
Production from propane dehydrogenation (PDH) units, of which there were several outages in early and mid 2018, also has been good in recent weeks.
Major US propylene producers include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, Flint Hills Resources and Shell Chemical.