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An Analysis by Garrett Velarde


The MMA settlement for January 2018 was unanimously decided at $0.5175 per pound. This is an increase of $0.02 per pound from December 2017.

Polymer grade propylene (PGP) shot up real quick in mid January on top of the news that all domestic propane dehydrogenation (PDH) units were not operational. With propylene already short and demand healthy, this helped PGP pricing shoot up 30% in less than a week. Refinery grade propylene (RGP) eased up slightly during this PGP price surge. However, what comes up fast often falls down
even faster. Darn gravity! Just a week after the propylene surge, pricing came back down to where it was before the surge. All PDH units are operational at the time of this writing.

Domestic acetone supply is healthy. Almost all of 2017 import data is in except for December. Through the first 11 months of 2017, acetone imports saw an uptick of nearly 40% from 2016. Foreign sellers pushed pounds into the USA anticipating a shortage from the announcement of a USGC producer shutting down a unit as well as the perception that Hurricane Harvey was still taking its toll on
some phenol plants. Well, that unit is still running and all domestic producers have recovered from the horrendous storm. Next month’s writing could paint a new picture once that unit is officially offline, which is anticipated to occur in 2 weeks time.

The domestic truck and rail market saw a little more softening despite the settlement increase. Economics
101 points the finger at supply/demand with a bit more of the former. Domestic producers will continue to fight import pricing. We see the irony in that acetone pricing remained firm while propylene spiked, but as soon as propylene returned to its pre-spike levels, acetone came down. Once again, supply/demand is to blame.

We predicted not too much movement in the last settlement. Two pennies ain’t too much! For February’s settlement, we predict an ebb as the PDH units are all functioning properly. Spot pricing is up in the air with the shutdown of a USGC unit.




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