HOUSTON (ICIS)–US May propylene contract prices are under upward pressure because of a sharp spot-price uptrend since early April.

Contract discussions are ongoing late into the month, compared with a typical mid-month settlement, amid nominations for higher prices. Propylene buyers generally anticipate some increase for May given rising spot values and fundamentals.

The two sides have not yet reached an agreement in negotiations, and a settlement could be pushed into next month, which rarely happens.

Some firming of contract prices was expected. After contracts rolled over in April, market sources said propylene had likely reached a floor after falling for five consecutive months as supply grew increasingly ample.

Spot prices rose by 8 cents/lb ($176/tonne) from early April to their highest point in May at 40 cents/lb, although spot values have fallen below that peak in the last week of the month.

The spot-price uptick appears to be the driver of increase initiatives in May, as supply is more than ample, outpacing derivative demand.

Propylene inventories rose to historic highs in late February, and supply should continue to improve as maintenance season at refineries and steam crackers wraps up, barring any unexpected outages.

Inventory levels have fallen over the last several weeks to under the 6.0m bbl mark, according to Energy Information Administration (EIA) statistics, although they remain high compared with historical levels.

“There’s still record inventories, but I am not sure it’s in the right places,” a source said.

“Inventories are extremely sufficient to meet demand,” another source said.

Downstream derivative demand has been sluggish, outpaced by rising supply levels that have been at or near record highs for most of 2019.

Upstream costs have fallen as WTI crude futures have tumbled below $60/bbl in May. Natural gas liquids (NGLs) prices are also low.

Looking ahead to June, market players do not anticipate any significant firming in propylene markets, as inventories are likely to continue to outpace demand.

US April polymer-grade propylene (PGP) contract prices were assessed flat at 35.5 cents/lb. PGP spot prices were assessed at 38.5-38.75 cents/lb in the week ended 24 May.

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.

Image above shows objects made of polypropylene (PP). Photo by Al Greenwood

Focus article by Amanda Hay

https://www.icis.com/explore/resources/news/2019/05/30/10372226/us-propylene-contracts-pressured-amid-spot-price-uptrend

HOUSTON (ICIS)–US May propylene contract prices are under upward pressure because of a sharp spot-price uptrend since early April.

Contract discussions are ongoing late into the month, compared with a typical mid-month settlement, amid nominations for higher prices. Propylene buyers generally anticipate some increase for May given rising spot values and fundamentals.

The two sides have not yet reached an agreement in negotiations, and a settlement could be pushed into next month, which rarely happens.

Some firming of contract prices was expected. After contracts rolled over in April, market sources said propylene had likely reached a floor after falling for five consecutive months as supply grew increasingly ample.

Spot prices rose by 8 cents/lb ($176/tonne) from early April to their highest point in May at 40 cents/lb, although spot values have fallen below that peak in the last week of the month.

The spot-price uptick appears to be the driver of increase initiatives in May, as supply is more than ample, outpacing derivative demand.

Propylene inventories rose to historic highs in late February, and supply should continue to improve as maintenance season at refineries and steam crackers wraps up, barring any unexpected outages.

Inventory levels have fallen over the last several weeks to under the 6.0m bbl mark, according to Energy Information Administration (EIA) statistics, although they remain high compared with historical levels.

“There’s still record inventories, but I am not sure it’s in the right places,” a source said.

“Inventories are extremely sufficient to meet demand,” another source said.

Downstream derivative demand has been sluggish, outpaced by rising supply levels that have been at or near record highs for most of 2019.

Upstream costs have fallen as WTI crude futures have tumbled below $60/bbl in May. Natural gas liquids (NGLs) prices are also low.

Looking ahead to June, market players do not anticipate any significant firming in propylene markets, as inventories are likely to continue to outpace demand.

US April polymer-grade propylene (PGP) contract prices were assessed flat at 35.5 cents/lb. PGP spot prices were assessed at 38.5-38.75 cents/lb in the week ended 24 May.

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.

Image above shows objects made of polypropylene (PP). Photo by Al Greenwood

Focus article by Amanda Hay

https://www.icis.com/explore/resources/news/2019/05/30/10372226/us-propylene-contracts-pressured-amid-spot-price-uptrend

HOUSTON (ICIS)–US epoxy resins prices moved up in May, but feedback diverged this month on the degree of upward pressure that held in the market.

US May liquid epoxy resin contracts were assessed at an increase of 2 cents/lb ($44/tonne) on the low end and at an increase of 3 cents/lb on the high end. This marks the first increase seen in 13 months.

ICIS assessed the US May liquid epoxy resin contract price at $1.42-1.48/lb DEL (delivered) North America.

UPWARD PRESSURE
Market players were not in complete agreement regarding the separate 8-10 cent/lb price increases and their justifications this month.

In general, a slight to moderate portion of the increases went through amid upward pressure from feedstocks and a pickup in seasonal demand.

There were mentions of a big portion of the increases going through amid a hard push, but this could not be widely confirmed.

Some buyers also mentioned they saw no increase in prices, but they were either dealing primarily with imports or were not active in the market this month.

MARKET DRIVERS
US upstream phenol supply is improving and logistical issues are easing, but a force majeure on US bisphenol A (BPA) remains in place, as phenol supply is not back to normal levels yet.

Some pushed back and commented that feedstock developments did not fully justify the increases in light of balanced supply and demand.

Supply from domestic and import sources was healthy, with competitively priced imports also blunting some of the increases.

Meanwhile, seasonal demand from the coatings sector is kicking in, while demand from the automotive sector is steady compared to other regions amid healthy US economic fundamentals.

IMPORT TRENDS
Spot import prices are holding steady in the mid-to-upper $1.20s/lb, but offer levels were heard to be holding flat, inching up or inching down slightly depending on the country of origin.

There was no clear agreement about the markets in Asia, with some pointing to higher feedstock costs and stronger demand outside of China, and others mentioning the continued influx of imports and the lack of significant upward momentum from safety inspections in China.

Although demand has not really taken off in the region, there is no clear signal as to how prices may trend. While an economic slowdown could exert downward pressure, suppliers in the region may attempt to hold prices in an effort to preserve margins. In the following graph, the spread between Asia epoxy and epichlorohydrin (ECH) has narrowed since the start of this year.

OUTLOOK
Domestic demand is expected to increase over the summer during the peak season, but some buyers may be cautious about procuring too much material.

There is some uncertainty regarding the outlook for demand this year, making it unclear if there will be any year-on-year growth.

Economic uncertainty and nervousness about escalating trade tensions could affect underlying sentiment in Asia, hurting downstream demand and boosting the flow of material to the US.

Epoxy resins are used as adhesives on metals and construction materials, as well as in coatings and automobiles.

Major US epoxy resin producers include Hexion, Huntsman and Olin.

Click here to view related stories and content on the ICIS US-China trade war topic page.

Focus article by Tarun Raizada

https://www.icis.com/explore/resources/news/2019/05/28/10371300/us-may-epoxy-contracts-increase-amid-lingering-uncertainty