The Urethane Blog

Propylene Has Probably Peaked for Now


AFPM 2017: US propylene to see sharp drops in April-May: sources

San Antonio (Platts)–27 Mar 2017 545 pm EDT/2145 GMT


Propylene pricing in North America could see steep drops in April and May on the back of suppressed demand, sources said Monday.

Market sentiment has centered between a contract price settlement for April of flat to down 4 cents/lb ($88/mt), multiple sources said on the sidelines of the American Fuel & Petrochemicals Manufacturers’ annual International Petrochemicals Conference. May could see further decreases of up to 8-10 cents/lb if buyers defer purchases in anticipation of drops, a source with a major polypropylene producer said.

“At some point it becomes a psychological issue, and if buyers expect decreases, they will hold off purchases as long as they can,” said the source, who buys propylene for polymer production.

Other sources, however, have cautioned that an upcoming turnaround at Flint Hills Resources’ 545,000 mt/year propane dehydrogenation unit in Houston could tighten spot availability, limiting any downward movement expected. That turnaround is scheduled to begin in April and last two months, sources said.

Propylene contract prices rose 10.50 cents/lb — or 25% — during the first quarter of 2017, with March closing at a 4 cents/lb increase to 52 cents/lb, the highest level since December 2014 (61.50 cents/lb), according to S&P Global Platts data.

The increases were fueled by sharp increases in spot pricing for both refinery- and polymer-grade propylene that resulted from tighter supply amid steam cracker and refinery turnarounds.

Spot refinery-grade propylene rose 175% from December 30, 2016, through March 9, hitting a 26-month high of 46 cents/lb FD USG before sliding 20%, closing Monday at 36.75 cents/lb.

Spot PGP followed a similar trajectory, up 61% from December through March 8, when it reached a 26-month high of 54.25 cents/lb. Spot pricing has shed nearly 10% since, closing Monday at 49.25 cents/lb FD USG.

–Nida Qureshi,

–Edited by Annie Siebert,