US propylene contracts were dropping for a second consecutive month, with contract players leaning heavily toward a 4-cent/lb decrease for July, market sources said this week.
Those sources cautioned, however, that as of Tuesday there was no market-wide settlement as at least one producer had yet to agree to it.
"There have been some discussions about down 4 cents/lb," said a source familiar with the discussions. "But at least one seller is a little nervous that (refinery-grade propylene) could run up on the back of higher mogas/alkylation values."
Should such a settlement be finalized, the nearly 5% drop would put polymer-grade propylene at 78 cents/lb and chemical-grade product at 76.50 cents/lb, both three-month lows according to Platts data.
Propylene contracts had previously settled for June down 15 cents/lb at 82 cents/lb for PGP and 80.50 cents/lb. The last time propylene contracts were below the 80-cent/lb for either product was March, when PGP was at 72 cents/lb and CGP was at 71 cents/lb.
Word of a 4-cent/lb partial settlement first emerged Monday. It would be in line with market expectations of a 3- to 5-cent/lb decrease based on recent spot market behavior and supply/demand dynamics.
Downstream, some in the polypropylene market had expected a steeper drop in the 5- to 7-cent/lb range.
Spot PGP was last assessed July 8 on either side of 77 cents/lb, while CGP was on either side of 74 cents/lb.
RGP, meanwhile, was last assessed Monday on either side of 68.50 cents/lb after bid/offer ranges were heard at least .50 cents/lb stronger to open the week.
