August US propylene CP settles down 2 cents/lb on month: sources

US chemical companies agreed upon a fresh contract price for polymer-grade propylene, which was down 2 cents month over month at 35.5 cents/lb for August, market sources confirmed Aug. 29.

Additionally, the contract price for chemical-grade propylene also dropped 2 cents to 34 cents/lb for August.

Contract price discussions consider spot price movements throughout the month. During August, spot PGP had mixed movements. It reached a near two-year low on Aug. 19, when Platts, part of S&P Global Energy, assessed it at 30.75 cents/lb. Prices later bounced back but remained within a 2-cent/lb range.

The uptick in spot prices during the last week of August was in response to supply issues and a slight rise in exported volumes, according to market participants. Enterprise reported issues in both its propane dehydrogenation units on Aug. 17 and Aug. 23. However, fundamentals remain weak, with high inventory levels and weak downstream demand.

The drop in contract prices impacts downstream markets, which have been struggling with their margin levels. Polyol producers announced price increases on Aug. 11, citing challenging market conditions that have impacted their profitability.

"I think that a drop in everything else will follow... sign of poor economics," an acrylics market participant said.

"I was expecting a drop of 3 cents/lb," a polypropylene distributor said. "This opens up the possibility for an additional drop in the September price, considering the average spot PGP price this month."

The distributor added that PP demand continued to be weak, with no end-consumer sales.