Welcome to Market Horizons. Our monthly newsletter is written by our knowledgeable business directors and explores the latest in market trends.





An Analysis by Garrett Velarde


The MMA settlement for September was unanimously decided at $0.5425 per pound. This represents an increase of $0.005 per pound from the August settlement. The mountain climb continues on top of the run- up in refinery grade propylene (RGP) pricing. Is there relief in sight or does the momentum carry on?

The RGP movement in September was factored in near that 0.7 level for the MMA settlement. RGP pricing increased approximately $0.0075 per pound on a 45-day volume weighted average compared to the previous 45-day weighted average. RGP pricing in late September and early October has flattened out and has traded within a $0.01 per pound range. The delta between RGP and polymer grade propylene
(PGP) has widened to approximately $0.125 per pound. It will be interesting to watch what feedstock is preferred to flexible feed steam crackers. The run up in ethane pricing is making propane, butane, and naphtha feeds a consideration again. These feeds yield a significant more amount of propylene than the ethane feed.

Acetone imports dropped from 17 KT in July to near 10 KT in August. The arbitrage from both Europe and Asia are wide open with any respectable discount to the MMA settlement. However, with the spot market all over the place, it as clear as muddy water if the arbitrage is indeed open. Global phenol demand remains strong. This has kept acetone plentiful and needing to find a home to keep phenol production going. Domestic operating rates are running around 80-85%. On top of the strong phenol demand, INEOS has made a public announcement of increasing their capacity by 37% at their Mobile, AL phenol/acetone unit. This will make the unit the largest in the world with capacities of 850,000 metric tons per annum of phenol and 520,000 metric tons per annum of acetone. We anticipate this being owed to healthy phenol demand, but also the desire to import less acetone from Europe for INEOS’ own consumption here in the USA.

The domestic truck and rail market has not seen any price increase announcements despite higher propylene prices. Any announced acetone increases would only encourage more imports. Domestic producers are trying to recover more margin on the phenol side by raising the benzene adders to the contracts available to negotiate for 2019-2020.

We predicted the September MMA settlement to have a small hike up from the August settlement. (*Golf clap*). We anticipate RGP climbing a bit more up to get that delta between RGP and PGP closer to $0.10 per pound. Therefore, we will call for another small hike up in October’s settlement.


ISSUE: October 2018


The Plaza Group · 1177 West Loop South, Suite 1450 · Houston, Texas 77027

Phone (713) 266-0707 · Fax (713) 266-8660 · Orders (800) 876-3738 · Email contact@theplazagrp.com


© 2018 The Plaza Group. All Rights Reserved. Website by Dzine Works