HOUSTON (ICIS)--Initial settlements for US August propylene contract prices are at a 0.5 cent/lb increase from July levels, market sources said on Thursday and late on Wednesday, although the settlement is not yet marketwide.
If fully accepted, the settlement would put August contract prices for polymer-grade propylene (PGP) at 39.5 cents/lb ($871/tonne), up from 39.0 cents/lb in July, and for chemical grade propylene (CGP) at 38.0 cents/lb, up from 37.5 cents/lb.
Climbing spot prices had put upward pressure on the market.
PGP front-month trades in August have been in a range of 37.5-39.0 cents/lb, compared to 36.0-37.5 cents/lb in July.
Spot prices had been climbing in recent weeks amid less-than-expected supply levels as a US Gulf propane dehydrogenation (PDH) unit did not come online as expected.
The 750,000 tonne/year PDH unit was expected to be fully commissioned in the second quarter with production beginning in July. As July approached, expectations for the start-up date moved from July to August. Now, the unit is not expected to start up until September.
Slightly higher propylene inventory levels have put some downward pressure on the market and may have limited the contract price increase.
Data from the US Energy Information Administration (EIA) shows that the average of weekly inventory levels in August has been about 2.1% higher than the average of weekly inventory levels in the prior month. Additionally, inventory levels have increased for three of the last four weeks.
A full settlement for August contracts is pending confirmation of further settlements from market participants.
US propylene contracts are typically settled in the middle of the month for the current month.
Major US propylene producers include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, Flint Hills Resources and Shell Chemical.
Major buyers include Arkema, Ascend Performance Materials, Braskem, Dow Chemical, INEOS, Oxea and Total.