US propylene contract prices for September are starting to settle 3 cents lower, with polymer-grade propylene closing at 30 cents/lb and chemical-grade propylene at 28.5 cents/lb, sources said Thursday.
The drop is 1 cent/lb greater than the initial nomination of a 2 cents/lb decrease in late August.
If the settlement is accepted market-wide, it would put US propylene contract prices at their lowest level since April 2009’s 29 cents/lb for PGP and 27.5 cents/lb for CGP.
The dip will also mark the seventh consecutive decrease.
The decrease is on the lower end of expectations as recent spot ranges were indicating a 3-5 cents/lb drop, sources said.
An unplanned outage on Monday at Flint Hills Resources’ propane dehydrogenation unit, followed by a seven-day planned turnaround on Splitter No. 2 at Enterprise Products Partners’ Mont Belvieu, Texas, complex, prompted the lower contract price settlement, one trading source said.
In spot market activity, September PGP was last offered Wednesday at 27 cents/lb MtB-pipe, while refinery-grade product was seen in a bid-offer range of 16-18.5 cents/lb MtB-pipe.
Platts assessed US spot PGP Wednesday at 25.75-26.25 cents/lb FD USG, while US spot RGP was assessed at 17-17.5 cents/lb FD USG.
US propylene contract prices are settled on a monthly basis between major producers and buyers.
The process includes price nominations by producers and subsequent negotiations with customers.
The contract price is generally 2 cents above spot PGP prices at the end of the prior month and the beginning of the new month.
Refinery-grade propylene pricing is also considered in the formula because it is a large source of PGP.
