Asian propylene rangebound although oil prices continue to fall
Asia’s propylene FOB Korea price benchmark held steady for a third day at $982.50/mt Wednesday even as crude oil prices continued to fall for a fifth consecutive day.
The most competitive propylene offer was $1,000/mt FOB Korea for a 1,500 mt cargo to be loaded in August. Buying interest was at $970/mt FOB Korea. The protracted downturn in oil prices have stopped propylene’s bullish tempo. But, prices had not lost any ground as of 0603 GMT, due to lingering supply concerns on GS Caltex and Mitsubishi Chemical’s propylene plant issues in South Korea and Japan. GS Caltex idled a 240,000 mt/year propylene plant early Monday at Yeosu, South Korea, due to mechanical problems, and the company is expected to delay by at least a week the shipment of at least two 1,500 mt cargoes this month.
Japan’s Mitsubishi Chemical has delayed by 10 to 14 days the restart of its steam cracker at Mizushima in order to accommodate additional repairs. This is on top of a recent 12-day extension of Mitsubishi’s steam cracker shutdown at Kashima for additional repairs. The steam cracker at Mizushima can produce 290,000 mt/year of propylene, while the Kashima plant can turn out 170,000 mt/year. Mitsubishi also shut down on Tuesday another steam cracker at Kashima that can produce 160,000 mt/year of propylene for seven weeks of maintenance. Mitsubishi is a regular and large buyer of propylene, supplementing its own production with purchases through term contracts to produce polypropylene, acrylonitrile, oxo-alcohols, acrylic acid and cumene at Chiba, Kashima, Mizushima and Yokkaichi. The company has continued to buy propylene during its steam cracker shutdowns.