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Monday, August 15, 2022

September US propylene contract prices settling 3 cents/lb lower:

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.

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