Propylene Forecast

PROPYLENE EXPECTED TO COME DOWN MORE IN Q1

As US PGP spot prices firmed to a yearly high of 68.50 cents/lb ($1,510/mt) in January, so too did US PP homopolymer injection export spot levels, moving to a H1 2018 high of $1,709/mt (77.52 cents/lb) FAS Houston, according to S&P Global Platts data. It was not until early August, that US PP spot prices would peak for 2018 at $1,720/mt FAS Houston, as PGP spot levels reached the low 60s cents/lb range amid propane dehydrogenation production issues.

PGP spot and contract prices began to come down in Q4 2018 as PDH units begin operating normally and building domestic inventory levels back up, which in turn led PP pricing down.

Interest for US PP exports did not emerge until December 2018, however, as PGP fell to a yearly low of 36.75 cents/lb. Trade participants said the renewed interest in US PP in December was due to weaker feedstock costs, but also due to some producers looking to sell off material ahead of the US ad valorem tax deadline on December 31. The lower PGP prices led PP market discussions to a yearly low of $1,147/mt FAS Houston late December.

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