US Aug propylene fully settles higher for first time since Jan

HOUSTON (ICIS)–US August propylene contracts were reported fully settled on Friday, increasing for the first time since January.

August contracts moved up 5 cents/lb ($110/tonne), putting polymer-grade propylene (PGP) at 72.5 cents/lb and chemical-grade propylene (CGP) at 71.0 cents/lb.

Several large buyers had been pushing for a smaller increase, citing concerns about demand destruction and high inventory levels.

However, continued strength in the spot market and concerns about tighter supply led prices higher.

August contracts were initially nominated for a 6.5 cent/lb increase, but spot prices never rose high enough to support that level.

The August increase is the first since January, when contracts climbed 4 cents/lb.

Prices had fallen a cumulative 7 cents/lb since then, tracking weak demand as buyers drew down inventories and purchased hand to mouth.

However, peak demand season for propylene, especially from the polymer sector, is expected to push buyers to get more aggressive.

There is concern that high US propylene prices will open an arbitrage window for finished goods for derivative products, however.

Major US propylene producers include Chevron Phillips, Enterprise Products, ExxonMobil, LyondellBasell and Shell Chemical.

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