The Urethane Blog

Initial Propylene Settlements

Initial US July propylene contracts settle at 0.5 cent/lb increase

13 July 2017 17:01 Source:ICIS News

Arrow upHOUSTON (ICIS)–Initial settlements for US July propylene contract prices are at a 0.5 cent/lb increase from June levels, although the settlement is not yet marketwide, sources said on Thursday.

If fully accepted, the settlement would put July contract prices for polymer-grade propylene (PGP) at 39.0 cents/lb ($860/tonne), up from 38.5 cents/lb in June, and for chemical-grade propylene (CGP) at 37.5 cents/lb, up from 37.0 cents/lb.

The slight increase is in line with recent market expectations amid production issues in the market and data released this week showing a decline in inventory levels.

Two US Gulf propane dehydrogenation (PDH) units have been off-line for turnarounds.

One began a turnaround and had been expected to restart during June. That unit, which has a propylene capacity of 660,000 tonnes/year has been operating at reduced rates since it began restarting in late June, market sources have said.

The other PDH unit, which has a capacity of 750,000 tonnes/year, began a 30-day turnaround in mid-June and is expected to restart during the second half of this month.

Despite the outages, data released by the US Energy Information Administration (EIA) last week showing an inventory build in the last week of June had prompted expectations that a rollover for contract prices would be more likely. However, updated data released by the EIA on Wednesday showed inventory levels had fallen in the first week of July.

A full settlement for July 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.