After rising for several months in a row, U.S. propylene prices plummeted by 25.5 cents/lb in May-June. At present, the transaction price has dropped to the lowest level since November 2009, polymer grade propylene is 52 cents/pound, and 1146 US dollars/ton; chemical grade propylene is 50.50 cents/pound, and US$1113/ton.

Since the beginning of this year, the storm of supply has swept across the United States, coupled with cost pressures from crackers and refinery-grade propylene substitutes, which caused the US propylene contract price to soar by 40% in 4 months. At the end of April, the price reached the highest level of 77.5 US in the world. Points/lbs.

With the gradual increase in supply and weak demand, propylene prices began to weaken in the United States in May, and the propylene contract settlement price fell by 12 cents/lb in May, ending the month-long rally. According to official data from the United States, although the operating rate of US refineries started to fall from 92.6% to 92.0%, US propylene stocks still showed significant growth in the last week of June, which was up about 11% from the previous week to 4.17 million barrels. The increase in stocks caused the price of propylene in the United States to continue to decline.

However, the strength of the rebound in the US propylene market is quiet in the calm. According to sources, at least one propylene producer in the United States has proposed that the price of propylene in July will rise by 3 cents/lb. Some market participants said that although the current spot prices are still weak under supply pressure, the propylene contract prices will not drop in July, indicating to a certain extent that the US propylene market is beginning to bottom out.

Globally, propylene from crackers dominates the supply market, and over 60% of the propylene supply in the North American chemical market comes from the refining industry. Although theoretically speaking, due to the large amount of refining capacity and ethylene cracking capacity in North America, the region should have sufficient propylene production capacity, but the shale gas revolution brought low-priced natural gas to North America, and the price of crude oil remained high. Under the circumstances, most crackers have already retrofitted the plant to use lighter raw materials and to increase the flexibility of the use of raw materials, leading directly to the continuous decline of propylene production. Therefore, the price of propylene in the United States is unlikely to fall for a long time and will continue to rise in the long run.

Chuck Carl, research manager of propylene market at IHS Chemicals, pointed out that due to the shutdown of production capacity and the increase in the use of light raw materials, the production of PG and CG propylene in cracker will be reduced to 4.5 million in North America in the next few years. Ton/year, a reduction of 3.5 million tons/year compared to the peak output in 2004. In times of rising demand and shrinking output, the tight supply of propylene in the United States will inevitably push up prices, and there are even reports that the United States may become the highest price of propylene in the world by 2025.

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