Houston — August propylene contract settlements have begun with increases of 2 cents/lb ($44/mt), trade participants said on Tuesday. The initial increases were above the July polymer-grade propylene contract price of 59 cents/lb ($1,300/mt) and the July chemical-grade propylene contract price of 57 cents/lb ($1,256/mt), and were in line with market expectations that the August contracts could see a rollover or an increase as high as 3 cents/lb over July.

The increase was mostly attributed to a higher 45-day weighted average of PGP prices, according to market sources. Trade sources also pointed to stronger feedstock propane costs, some short-lived production issues with propane dehydrogenation units and a potential risk to operations and supply with the US still in the middle of hurricane season. Non-LST propane closed on Monday at 101.50 cents/gal, its highest level since October 2014, according to S&P Global Platts data.

Despite a higher 45-day weighted average, domestic supply has been increasing over the past seven weeks, according to the Energy Information Administration, and PGP spot prices have seen a gradual decline during August. Trade sources have said PGP supply is healthy but it does not necessarily mean supply is readily available for the spot market, as US propylene is still being exported at high volumes. Prompt PGP was assessed at 56.652 cents/lb FD USG on Monday, down 4.375 cents from a month earlier.

Additional August propylene contract settlements are expected this week. Should August be accepted at a marketwide increase of 2 cents/lb, it would take the PGP contract up to 61 cents/lb and the CGP contract up to 59 cents/lb.

The PGP contract price is generally 2-3 cents above the spot PGP price at the end of the previous month and the beginning of the new month. RGP pricing is also considered in the formula because it is a large source of PGP.

US propylene contract prices are settled on a monthly basis between major producers and buyers. The process includes price nominations by producers and subsequent negotiations with customers.

–Brian Balboa, brian.balboa@spglobal.com

–Edited by Jennifer Pedrick, jennifer.pedrick@spglobal.com

https://www.spglobal.com/platts/en/market-insights/latest-news/petrochemicals/082818-initial-us-august-propylene-contracts-gain-2-centslb-sources?utm_source=twitter&utm_medium=social&utm_term=petrochemicals&utm_content=photo&utm_campaign=news&hootpostid=77fc1810dff0b0f91ca9d7cf763f6c28

Houston — August propylene contract settlements have begun with increases of 2 cents/lb ($44/mt), trade participants said on Tuesday. The initial increases were above the July polymer-grade propylene contract price of 59 cents/lb ($1,300/mt) and the July chemical-grade propylene contract price of 57 cents/lb ($1,256/mt), and were in line with market expectations that the August contracts could see a rollover or an increase as high as 3 cents/lb over July.

The increase was mostly attributed to a higher 45-day weighted average of PGP prices, according to market sources. Trade sources also pointed to stronger feedstock propane costs, some short-lived production issues with propane dehydrogenation units and a potential risk to operations and supply with the US still in the middle of hurricane season. Non-LST propane closed on Monday at 101.50 cents/gal, its highest level since October 2014, according to S&P Global Platts data.

Despite a higher 45-day weighted average, domestic supply has been increasing over the past seven weeks, according to the Energy Information Administration, and PGP spot prices have seen a gradual decline during August. Trade sources have said PGP supply is healthy but it does not necessarily mean supply is readily available for the spot market, as US propylene is still being exported at high volumes. Prompt PGP was assessed at 56.652 cents/lb FD USG on Monday, down 4.375 cents from a month earlier.

Additional August propylene contract settlements are expected this week. Should August be accepted at a marketwide increase of 2 cents/lb, it would take the PGP contract up to 61 cents/lb and the CGP contract up to 59 cents/lb.

The PGP contract price is generally 2-3 cents above the spot PGP price at the end of the previous month and the beginning of the new month. RGP pricing is also considered in the formula because it is a large source of PGP.

US propylene contract prices are settled on a monthly basis between major producers and buyers. The process includes price nominations by producers and subsequent negotiations with customers.

–Brian Balboa, brian.balboa@spglobal.com

–Edited by Jennifer Pedrick, jennifer.pedrick@spglobal.com

https://www.spglobal.com/platts/en/market-insights/latest-news/petrochemicals/082818-initial-us-august-propylene-contracts-gain-2-centslb-sources?utm_source=twitter&utm_medium=social&utm_term=petrochemicals&utm_content=photo&utm_campaign=news&hootpostid=77fc1810dff0b0f91ca9d7cf763f6c28

London — European styrene spot prices have hit the highest since June 1 as the backwardation in the market steepened, according to S&P Global Platts data.

The 5-30 day forward styrene spot price was assessed at $1,388/mt FOB ARA Wednesday, up $5.50/mt on the day, and reaching the highest since early June.

The backwardation between August and September was calculated at $22/mt on Wednesday, from a flat structure last Friday.

The surge in prices and the emergence of a steep backwardation were driven by the production problem at LyondellBasell and Covestro’s jointly owned propylene oxide styrene monomer unit in the Netherlands.

Covestro said a problem arose on August 1. it also confirmed it declared force majeure on styrene supplies from the Dutch facility.

The rise in prices was counter to expectations as the market anticipated balanced to long fundamentals.

There were delays to imports from the US in mid- to late-July, but enough product was deemed to be available in August at the time that the price rise was modest.

Covestro said the duration of the shutdown was “difficult to predict.”

–Yuriko Kato, yuriko.kato@spglobal.com

–Edited by Jeremy Lovell, jeremy.lovell@spglobal.com

https://www.spglobal.com/platts/en/market-insights/latest-news/petrochemicals/080918-european-styrene-at-1388mt-fob-ara-highest-since-june-1-as-backwardation-steepens