US propylene contract prices for November look poised to drop for a second consecutive month, but the market was divided on the extent of the expected decrease, participants said this week.
Many propylene traders and buyers were talking the expected decrease anywhere from 4-10 cents/lb or more, with some of the consensus that a 5-7 cents/lb drop for November is likely.
"We think the November PGP contract goes down 6-8 cents/lb," a major propylene trader said. "A November PGP contract at 57 cents/lb looks pretty solid, down 7."
One buyer active in the spot market was more conservative.
"My guess is [down] 4-6 cents/lb now," he said.
Nominations from major producers -- including ExxonMobil, LyondellBasell, CP Chem, Shell, and Enterprise Product Partners -- are expected this week. Not all major producers usually nominate, and some decline to do so when a decrease is expected.
US propylene contracts last settled for October down 14 cents/lb from September at 64 cents/lb for polymer-grade propylene and 62.50 cents/lb for chemical-grade propylene.
The pronounced decrease for October resulted from weak demand in downstream markets, plentiful supply, and plummeting spot prices, sources said then.
Spot refinery-grade propylene has hovered below the 50-cent/lb mark for much of October, assessed at a 15-month low of 42.25 cents/lb on October 18, according to Platts data. The last time RGP was assessed that low was July 8, 2011 at 42 cents/lb.
Similarly, spot PGP and CGP have hovered below the 60-cent/lb mark for much of the month, also posting 15-month lows in the process. Spot PGP and CGP were assessed October 14 at 54 cents/lb and 51 cents/lb, respectively, their lowest values since July 23, 2010, when they were at 52.875 and 51.375 cents/lb, respectively.
Spot propylene prices have shown some strengthening over the past ten days, prompting some buyers and polypropylene market participants to revise their forecasts for November.
"We started at down 8-10 [cents/lb for the propylene contract]," a PP distributor said. "We revised to down 6-8 [cents/lb] and now we are at down 4-6."
