US April propylene contracts settle at rollover

Source: ICIS News

2019/04/19

HOUSTON (ICIS)--US April propylene contract prices settled at a rollover from the prior month for a majority of the market amid conflicting pressures of ample supplies and higher costs, sources confirmed late on Thursday.

The April settlement keeps contract prices for polymer-grade propylene (PGP) at 35.5 cents/lb ($783/tonne) and for chemical-grade propylene (CGP) at 34.0 cents/lb.

The rollover follows five months of consecutive declines, which had been due to increased production levels and building supply. US propylene inventories have declined from an all-time high of 6.6m bbl in February, but remain above historical levels and continue to keep downward pressure on the market.

The ample supply is being balanced against rising upstream crude oil values. Both West Texas Intermediate and Brent crude oil futures have risen more than $4/bbl in the last four weeks. 

$/bbl 28 Mar 4 Apr 11 Apr 18 Apr
WTI 59.30 62.10 63.58 64.00
ICE Brent 67.82 69.40 70.83 71.97

 Higher crude oil values increase costs for propylene produced in refineries, which is the largest source of US propylene, and tends to increase prices for propane used in propane dehydrogenation (PDH) units and crackers.

US propylene contracts are typically settled in the middle of the month for the current month.

The main outlet for propylene is as a feedstock for polypropylene (PP). Propylene is also used to produce acrylonitrile (ACN), propylene oxide (PO), a number of alcohols, cumene and acrylic acid.

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

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