US March propylene contract prices reached marketwide settlement Wednesday at a 6 cents/lb decrease to 47 cents/lb for polymer-grade product and 45.5 cents/lb for chemical-grade product, sources said.

The settlement is in line with market expectations, which had been talked at a decrease of 5-7 cents/lb.

The decline in prices is due to thin demand and healthy availability, sources said.

Some polypropylene producers have been heard reducing their run rates as they have little incentive to extend themselves beyond their contractual obligations, with buyers reluctant to take on spot volumes amid expectations that prices will fall.

US spot polymer-grade propylene was assessed unchanged Tuesday at 43.75-44.25 cents/lb FD USG for prompt-month (March) deliveries. The forward month (April) was also stable day on day, holding at 43.75-44.25 cents/lb FD USG.

Refinery-grade product on a three- to 30-day basis was assessed unchanged at 29.25-29.75 cents/lb FD USG Tuesday, tracking prompt-month PGP pricing.

The PGP contract price is generally 2-3 cents above the spot PGP price. Refinery-grade propylene 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 between the middle to the end of the month. The process includes negotiations between suppliers and their customers.

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