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PGP Supply Woes Persist Sending Spot Prices to New Cycle Highs
August 19, 2024
Enterprise Products Propylene Dehydrogenation (PDH) unit #2 in Mont Belvieu, TX had undergone required maintenance and was set to restart Tue Aug 14th. However, the renewed production did not go as planned and on-spec production reportedly failed on Wed Aug 15th, according to market sources.
This new production disruption contributed to a $.03/lb jump in spot Aug PGP prices which reached a new cycle high of $.56/lb on Thursday.
Enterprise's two PDH units in Mont Belvieu have a combined total annual capacity of 3.3 billion pounds of on-purpose Polymer Grade Propylene (PGP), according to Resintel capacity data. The new PGP outage follows a disruption with Dow Chemical's PDH unit early this week. Dow's PDH facility in Freeport, TX has annual production capacity of 1.65 billion pounds of PGP.
PDH units are a highly desired and cost-effective means to produce PGP monomer; they are massive and complex so complications frequently arise when bringing PDH units back online, while maintaining normal operations can also be a challenge. According to Enterprise, they recently completed a successful turnaround at their PDH #1 unit, which took an impressive 100 days with as many as 1250 people working per shift, and in total, more than 1.25 million hours.
PGP is the main feedstock for Polypropylene production and their prices are highly correlated. Both PGP and PP contract prices rose a total of $.07/lb between June and July. Aug PGP prices began as a discount to July levels, and have since not only recovered the gap, but have now exceeded prior month pricing.
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