US March propylene contracts settle down 4 cents/lb

Author: Michael Sims

2020/03/27

HOUSTON (ICIS)--US March propylene contracts settled lower by 4 cents/lb for the majority of the market amid falling feedstock prices, ample supply and muted demand.

The settlement puts March polymer-grade propylene (PGP) contracts at 28.0 cents/lb ($617/tonne) DEL (delivered) and chemical-grade propylene (CGP) at 26.5 cents/lb DEL.

Contract prices are at their lowest levels in 11 years.

Spot prices fell by around 30% during March due to muted demand from the coronavirus (Covid-19) and because of collapsing crude.

Demand for polypropylene (PP), the biggest derivative of proplyene, has been lacklustre for months due to a slowing global economy, and is only expected to weaken further.

Feedstocks propane and butane hit 21-year lows during March, also pressuring prices.

Inventories were mostly steady throughout the month but remain high in a historical context.

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, Enterprise Products, ExxonMobil, Flint Hills Resources and Shell Chemical.

Visit the ICIS coronavirus topic page for analysis of the impact on chemical markets and links to latest news.