The US polymer-grade propylene (PGP) contract for May fell by 7¢/lb to 52¢/lb, the steepest drop in two years, on weaker spot prices and steady production.
The drop was in line with a 6.6¢/lb drop in Argus' May PGP contract index, which settled on 15 May, and it was the sharpest drop since the April 2024 contract settled 10¢/lb lower. But April 2026's contract at 59¢/lb was close to a four-year high after spot prices in March and early April rose sharply, tracking crude values, following Iran's closure of the strait of Hormuz.
Some participants described May as a "price correction", or mean reversion, after the spike.
"I think panic buying sent spot PGP prices up to unsustainable levels," one market participant said. "Now everyone realizes supply is healthy, and the market is calming down."
The settlement came on the penultimate trading day of the month, causing some concern among market participants. One contract participant disagreed with the settlement, sources said.
US spot PGP prices fell from 53¢/lb at the start of May to a low of 37.25¢/lb this week, a drop of 30pc. Since peaking in April at 62.5¢/lb, spot PGP prices have fallen by 40pc and are only 13pc higher than pre-war levels.
The fall in PGP values this month outpaced declines in West Texas Intermediate (WTI) crude. Argus' WTI Houston outright price fell to $90.22/bl on 28 May, down by 17pc from from $108.92/bl at the start of May.
US PGP output was steady in May, with only a minor issue at one propane dehydrogenation (PDH) unit. Enterprise Products Partners' 750,000 t/yr PDH-1 unit compressor tripped two weeks ago and returned to full rates soon after.
US PDH units are running full out and supply seems to be healthy, a market participant said.
