After having risen for five consecutive months in Europe, spot propylene prices have been posting gradual decreases since the last week of May, losing €60-85/ton as per Chemorbis. Europe’s spot propylene market started 2010 on a firm note, with prices maintaining their upward rally until May. Having posted the largest jump in January of €175-185/ton, the spot propylene prices rose by €15-25/ton in February, €70/ton in March and €20-25/ton in April in a month over month comparison. The bullish run in spot propylene prices was attributed to higher naphtha and crude oil prices in that period, coupled with production issues in the region through May, leading to tight supplies. Fluctuating over the course of May, propylene prices started to retreat towards the end of May as the market direction turned south in the energy markets, and crude oil prices hit US$68.75/barrel in the last week of May and naphtha prices dropped by US$87/ton since the beginning of January. Although crude oil prices have rebounded over the course of June, reaching US$78.25/barrel, volatility is leading to an uncertain outlook. The lower euro/USD parity, which came down from 1.4365 to 1.2355 since the start of January, along with improving availability were other factors weakening propylene prices.
In line with the downturn in the spot propylene market, Europe’s propylene contracts were settled with a €22/ton decrease for July, coming down for the first time since the beginning of 2010. Looking back, European propylene contracts had been settled with monthly increases of €40/ton in January, €85/ton in February, €35/ton in March, €40/ton for April and €20/ton for May. The contracts had been settled at a rollover in June.