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US polymer-grade propylene contracts for March were heard beginning to settle down 6 cents/lb at 73 cents/lb delivered, as spot prices continued their late-February decline, market sources said Thursday.
The price decrease was reported by three major buyers and one major producer and puts a stop on six consecutive months of contract increases. The US PGP contract price for August 2012 was at 50.50 cents/lb delivered -- 28.50 cents/lb lower than February 2013 contract price of 79 cents/lb delivered.
Spot polymer-grade propylene prices declined 7.25 cents/lb since February 1 and were last assessed on March 1 at 67.75-68.25 cents/lb delivered, following weak polypropylene demand, several sources said. Shortly after February PGP contract settled at 79 cents/lb mid-month, spot deals in the upper 60s were reported, as several market sources reported traders unloading product while taking advantage of high prices.
On Thursday, spot PGP was heard offered at 69.125 cents/lb Mont Belvieu-pipe basis.
Initial nominations for March PGP contracts came in last week at a 6 cents/lb decrease, with market participants expecting a 7-10 cent/lb drop in contract settlement.
In chemical-grade propylene contracts, March CGP was also heard beginning to settle down 6 cents/lb at 71.50 cents/lb, however only one major buyer could immediately confirm the settlement.
US propylene contracts are settled on a monthly basis between major producers and buyers. The process includes price nominations by producers and subsequent negotiations with customers.