US propylene contract prices for March are fully settled 1.5 cents/lb lower, with polymer-grade propylene closing at 49 cents/lb and chemical-grade propylene at 47.5 cents/lb, sources said Monday.
The settlement puts contract prices at their lowest levels since October 2009, when PGP and CGP settled at 47 cents/lb and 45.5 cents/lb, respectively.
The drop was 3 cents below the initial nomination of a 1.5 cents/lb increase heard late February.
Market expectations in recent weeks called for a 1-3 cents/lb drop after spot PGP trading for March hovered near a 66-month low in the 45-46 cents/lb range.
Source said there was reduced downstream polypropylene demand stemming from three force majeures, and ample supply from strong petrochemical and refinery production rates as the reason behind the lower prices.
US propylene contracts 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 2-3 cents above spot PGP prices seen 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.
Platts assessed US spot RGP at 39.25-39.75 cents/lb delivered, while PGP was assessed last Friday at 45.25-45.75cents/lb delivered.
Platts last assessed US PGP below the 45.5 cents/lb level on October 23, 2009, when it was at 44.25-44.5 cents/lb FD USG.