US Propylene Prices Maintain Stability as Better Supplies Improve the Market Outlook
US Propylene Prices Maintain Stability as Better Supplies Improve the Market Outlook

US Propylene Prices Maintain Stability as Better Supplies Improve the Market Outlook

  • 24-May-2021 12:00 PM
  • Journalist: Robert Hume

With all propane dehydrogenation (PDH) units operating at a healthy rates and little supply bottlenecks, price of polymer-grade Propylene maintains its stability in May. Market activity has also witnessed a slowdown after the upheaval of February-April phase.

Propylene supplies observed a setback in H2 of the first quarter where more than 75% of the US Propylene capacity went offline in the aftermath of polar storm. Unwanted plant outages and reduction in operating rates sent prices in frenzy with the largest ever month-on-month increase in contract prices seen in February. Buoyant polymer demand further resulted in spread improvements for both polyethylene (PE) and polypropylene (PP) prices relative to their monomers. The average spread between PP and Propylene has widened significantly since the starting of Q42020.

However, the market dynamics returned to normal towards the end of April as operating rates ramped up and dehydrogenation plants increased output gradually. Demand has been up since January after the holidays break due to healthy end user consumption. Plastics market has been up as economies are rebounding after the covid fallout. Price of US propylene currently stands around USD 710- 745 per MT FOB Texas and several downstream PP players are eyeing on further eases in Propylene for relaxation in the overall production cost. Although, the PP-Propylene spreads are likely to stay intactly widened even during Q2.

As per ChemAnalyst, optimum refinery utilization rates, healthy dehydrogenation output rates have improved the supply fundamentals which has stabilized the Propylene prices in USA since the last few weeks. With ramping up vaccination programs and followed economic rebound, demand is expected to stay robust in the coming weeks as manufacturing and construction sector are anticipated to peak in and around Q3. Increased vaccination rates may further pent-up the derivative consumption from the packaging sector and other consumer-related services like travel and entertainment after months of slowdown.

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