US refinery-grade propylene falls to lowest price since mid-2009

Houston (Platts)–8Jan2015/623 am EST/1123 GMT

US spot refinery-grade shed 0.25 cent/lb Wednesday to notch its lowest assessment in five and a half years, according to Platts data.

The assessment dropped to 34.75-35.25 cents/lb delivered, its lowest level since it was assessed at 34.875 cents/lb delivered on July 10, 2009.

RGP prices have softened due to the weak overall energy complex, rising supply levels and declining prices for downstream polymer-grade propylene, market sources have said.

NYMEX front-month crude closed below $50/barrel for the second straight session on Wednesday, though the $48.65/b settle was 72 cents higher than Tuesday. The ongoing decline in crude has exerted downward pressure on RGP prices.

US propylene production facilities — refineries, steam crackers, splitters and a propane dehydrogenation unit — have seen steady operation. Stocks of US propylene for non-fuel use rose to 3.645 million barrels last week, up from from 3.586 million barrels the week prior, according to data released Wednesday by the US Energy Information Administration.

The US PGP assessment ended 2014 at a 26-month low, assessed on December 19 at 52.75-53.25 cents/lb FD USG.

PGP was heard traded for January at 47 cents/lb Mont Belvieu pipe basis on Wednesday, 6 cents below the most recent assessment. Earlier in the week, January propylene contracts were nominated down 8 cents, sources said. If accepted market wide, that would bring PGP contracts to 53.50 cents/lb.

In spot activity, RGP was last heard bid Wednesday at 34 cents/lb MtB-pipe for January. The most recent trade came late Tuesday at 34.75 cents/lb via railcar for January. Railcar activity falls outside Platts' assessment methodology, but those deals typically carry a 1 cent/lb premium to MtB-pipe.

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