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US November propylene contracts settle down 10 cents/lb

Nov. 20, 2018

US November propylene contracts settled at a decrease of 10 cents/lb from the prior month, sources confirmed on Thursday, amid falling upstream costs and increasing supplies.


The November settlement puts contract prices for polymer-grade propylene (PGP) at 50.0 cents/lb ($1,102/tonne) and for chemical-grade propylene (CGP) at 48.5 cents/lb. The decline follows a rollover in October.


Propylene supply has loosened in recent weeks amid reduced demand and improved production.


"We are getting to the usual end of the year slow down," a market source said.


Demand has eased in recent weeks amid seasonal year-end de-stocking in downstream sectors. Some demand fall-off also may be due to a downstream turnaround in the first half of the month.


Meanwhile, production has improved from most sources.


Most propylene in the US is produced in refineries, which have seasonal maintenance in autumn as they transition to winter fuels. Refinery operating rates, which fell below 90% in October, rebounded above 90% in November.


Propylene production from crackers also was constrained during much of the second and third quarters as tight cracker margins encouraged increased usage of ethane feedstocks. Ethane produces the least amount of propane feedstocks.


Some cracker margin recovery in recent weeks is allowing some flexible crackers to increase usage of heavier feedstocks and increase co-product production, although ethane remains the favoured feedstock.


Further boosting production was the restart of a cracker in early November after a turnaround.


Production also has improved from propane dehydrogenation (PDH) units following several outages in summer and early fall, although there were some brief issues in late October and in November.


"The market is well supplied," a market source said.


Propylene inventories in the second week of November rose their highest level since January 2017.


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