US spot PGP falls to lowest since November

US prompt-month spot polymer-grade propylene (PGP) fell this week to the lowest in nearly five months on weak domestic demand for some smaller volume propylene derivatives, especially acrylonitrile (ACN) and propylene oxide (PO).

US PGP traded on Tuesday at 41.5¢/lb, down by 30pc since 5 March and the lowest price since late November.

US PGP's pricing in recent years has mostly been driven by supply changes, but market participants believe that some of the price drop since early March stems from weakness in PGP's smaller demand sources like ACN and PO.

ACN consumes about 7pc of US propylene, declining from 10pc over the last six years, and PO accounts for around 11pc of US demand for propylene. US demand remains weak for polypropylene (PP), which accounts for about half of domestic PGP demand, but has increased over the last few weeks, with operating rates improving. Rising PGP demand has been offset by falling production of smaller volume derivatives like ACN and PO, largely driven by elevated PGP spot prices in the first quarter that narrowed margins.

Cornerstone's 257,000 metric tonne (t)/yr ACN unit in Waggaman, Louisiana, has been down on an extended turnaround, according to market sources. That unit comprises 16pc of the US ACN capacity, according to Argus data. Another producer told Argus that ACN is being produced "to order," as demand has not been steady, saying "these are tough times" for ACN.

A PO producer in Texas began a planned turnaround this month that is expected to last until mid-May, reducing demand for US propylene. The turnaround has shut 20pc of US PO capacity, according to Argus data.

By Michael Camarda