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An Analysis by Garrett Velarde
The MMA Settlement for June was unanimously decided at $0.52 per pound. This represents an increase of $0.025 per pound from the May settlement. The march continued up for a time of the year usually screaming bearishness. Will the bull continue to buck in the summer heat?
The refinery grade propylene (RGP) movement in June was back in beat with the MMA Settlement. RGP pricing increased just over $0.025 per pound on a 45-day volume-weighted average. RGP pricing since mid-June has been volatile with trades done in the low 40’s all the way to mid to high 40’s. Polymer grade propylene (PGP) still rests in the mid 50’s on a volume- weighted average for 45 days. There are mixed reviews on the forecast for PGP. Some point to increased prices on the back of high crude oil prices; others argue pricing will need to come down some to stay competitive for propylene derivatives going to the export market. The USA has to export propylene derivatives to
stay balanced, but any issues at propane dehydrogenation (PDH) units will help drive the price up
for both RGP and PGP.
Since our last report, we feel the word imports needs to be defined. Any acetone not meeting ASTM standards is defined as off-spec. 25% of the March acetone imports landing on our shores were off-spec. We did not see any off-spec acetone in April, but the amount of imports was enough to
balance the USA market. 28% of the May imports were off-spec. The May imports were at the level needed to balance the USA acetone market including the off-spec material. Phenol margins continue to stay strong and rumors are circulating for increased adders to benzene for the next phenol contract season. Acetone will wait to see how phenol consumers react and whether demand for phenol
will continue to stay hot.
The domestic truck and rail market saw another round of increases come for the first week of July. The increases were from $0.04 per pound to $0.075 per pound. Collectively from mid-May to first week of July, the three rounds of increases combined ranged from $0.13-0.165 per pound.
We predicted June’s settlement to be a half dollar plus some extra change. TPG scores! Admittedly, July’s settlement will be a tough one to predict. Propylene direction is uncertain. Propylene dynamics suggest up, but propylene derivatives still need to compete globally. The MMA Settlement still gives the former more consideration. We will call for a roll to slightly up. Happy 4th of
ISSUE: JULY 2018
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