US propylene spot weakens on climbing inventories

US propylene spot prices weakened as good production and lacklustre exports pushed inventory levels to an all-time high, although spring turnarounds may lower stock levels in coming weeks. US polymer-grade propylene (PGP) was assessed at 34.50 cents/lb, compared with 34.50-37.75 cents/lb the previous week. Inventories have been rising since late 2018 on improved production from crackers and refineries. The trend continued into 2019, with stocks marking all-time highs several times since mid-January. Propylene production from refineries improved in recent weeks as strong demand for US fuel exports kept refinery operating rates high. However, rates fell last week as spring turnarounds began. Several crackers are also planning turnarounds in spring. Production from crackers has been strong as a late-2018 drop in crude oil values improved economics for heavier cracker feedstocks. However, a decline in ethane feedstock costs amid cracker turnarounds and delayed start-ups and an increase in heavier feedstocks due to rising crude oil values may encourage an increased lighter feedstock usage.