The agreement puts polymer-grade propylene (PGP) at 78.00 cents/lb and chemical-grade propylene (CGP) contracts at 76.50 cents/lb, as assessed by ICIS.
The drop this month was driven by lower spot prices in recent weeks, which outweighed gains in gasoline prices and concerns among some producers that alkylation levels were on an upswing.
Alkylation levels can influence the price of refinery-grade propylene (RGP), which accounts for around 60% of the US propylene market.
Refineries can use RGP as an alkylate in gasoline or sell the product to the chemical market.
RGP traded at 68.00-68.75 cents/lb this week, steady with the previous week, but down from deals done at 73.00 cents/lb in the first week of June.
The product was bid at 68.50 cents/lb on Friday against a 73.00 cent/lb offer.
Meanwhile, alkylation levels were assessed at 72 cents/lb, up by 6% from the first week of July, as a result of higher gasoline prices.
The RGP deals done this week below alkylation levels could indicate that anticipated supply length was pressuring propylene, one market source said, citing the restart of Petrologistics' propane dehydrogenation (PDH) plant earlier in the week.
The 544,000 tonne/year unit in Houston had been off line since the second week of June because of a problem with a compressor at the site.
Another factor that could be holding RGP prices back is a recent gain in supply.
US propylene inventories rose by 10% in the first week of July, jumping to their highest level in four months, the Energy Information Administration (EIA) reported this week.
Refinery-sourced propylene inventories stood at 2.475m bbl in the week ended 8 July, up from 2.257m bbl a week earlier, despite a small drop in operating rates at refineries, EIA data showed.
US refineries operated at 88.0% of capacity last week, down from 88.4% the week before, the government said.
The EIA figures refer to non-fuel use propylene, which is intended for petrochemical manufacturing.
Major US producers of PGP and CGP include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, LyondellBasell, Petrologistics and Shell Chemical.
The main buyers include Dow Chemical, INEOS, Ascend Performance Materials and Total.
The outlook for August points to a possible flat settlement, or a small increase, based on spot deals done so far this month, one market participant predicted.
US propylene contracts usually settle at the beginning of the month being negotiated.
($1 = €0.71)
