HOUSTON (ICIS)--Initial settlements for US September propylene contract prices are at a 7 cents/lb increase from August levels, market sources said on Friday, although the settlement is not yet marketwide.
If fully accepted, the settlement would put September contract prices for polymer-grade propylene (PGP) at 46.5 cents/lb ($1,025/tonne), up from 39.5 cents/lb in August, and for chemical grade propylene (CGP) at 45.0 cents/lb, up from 38.0 cents/lb in August.
The increases were driven largely by disruptions from Hurricane Harvey in the US Gulf coast, which pushed spot prices higher throughout September.
Front-month PGP spot trades in September were heard in a range of 45.00-48.25 cents/lb, compared to 37.50-39.00 cents/lb in August.
Harvey landed on the Texas coast near Corpus Christi on 25 August and remained in the region for several days causing massive flooding. Multiple crackers, refineries and chemical plants were taken offline due to the weather. Many have restarted, but some units remain offline.
The outages had caused two force majeure declarations during September and also had delayed the start-up of a new US Gulf propane dehydrogenation (PDH) unit, market source have said.
Prior to the storm, Enterprise expected to start up a new 750,000 tonne/year PDH unit in September. However, following the disruptions from Harvey, market sources now expect the PDH unit to start up in the second half of October.
A full settlement for September 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.
Image above: Propylene is used to make polypropylene (PP), which is used to make bottles like these. Source: Monkey Business Images/REX/Shutterstock