US October propylene contracts settle down 1.5 cents/lb

Author: Antoinette Smith

2019/10/31

HOUSTON (ICIS)--US October propylene contracts settled lower by 1.5 cents/lb ($33/tonne) for the majority of the market on Thursday, on sluggish demand and rising inventories.

The settlement puts October polymer-grade propylene (PGP) contracts at 37.5 cents/lb DEL (delivered) and chemical-grade propylene (CGP) contracts at 36.0 cents/lb DEL.

Negotiations started earlier in the month at rollovers to slight increases. With derivative demand slow and inventories building, momentum for a decrease gained strength later in the month.

Spot prices rose during negotiations amid increasing feedstock propane costs.

Downstream, INEOS Nitriles announced last week that it would lift its force majeure on acrylonitrile (ACN).

However, overall demand remains sluggish, with high inventory levels for polypropylene (PP), the main derivative of propylene.

Propylene inventories also have risen for seven consecutive weeks, amid higher refinery rates and increased use of liquefied petroleum gas (LPG) rather than ethane in flexible steam crackers, which results in a higher propylene yield.

Macroeconomic concerns permeate the petrochemical sector, tempering demand across most derivatives. Demand for PP has been subpar this year.

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The main outlet for propylene is as a feedstock for PP. Propylene is also used to produce 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.

Pictured above: polypropylene bottle
Source: Shutterstock