Olefins - Propylene Americas Monthly Market Overview June 2019

Propylene prices were rising through May as inventories were steadily decreasing on stable demand, but prices collapsed in June as unanticipated supply came from advantaged propane and butane cracking economics into flex ethylene crackers. Propane prices fell on a combination of supply length and decreasing WTI. PGP prices fell to about 32 cts/lb by early June and have remained there through the month. Although inventory levels have been generally reducing week over week based on EIA reports, increasing supply through the summer months through increased LPG cracking and high refinery run rates is now expected to combine with the still high inventories to stabilize prices at a much lower level. Prices are not expected to rise until inventories decrease back to historical norms, which we assess will occur early 2020.