Spot propylene prices shrug off lower energy complex in Asia
Asian propylene prices were mostly unaffected by the steep drops in crude oil and naphtha prices throughout the past week, although some slight losses were seen in spot prices, as per the pricing service of ChemOrbis. Limited supplies and strong demand even drove prices higher in some parts of the region. On the NYMEX, crude oil prices recorded relentless decreases during the first four working days of last week, posting a cumulative decrease of more than $6/barrel on the week.
Plunging crude oil prices pushed spot naphtha prices sharply downward in Asia. Although prices recovered some of their early week losses and rose by almost $30/ton on Friday, spot naphtha prices are currently down $65/ton when compared to the previous week and $55/ton with respect to early September. In spite of the sharp decreases seen in the upstream chain, spot propylene prices softened by only $10/ton on an FOB South Korea basis week over week. Offers moved up by around $20/ton on a CFR Taiwan basis and rose nearly $35/ton on a CFR Southeast Asia basis due to limited spot availability in these regions.
In production news, Taiwan’s CPC reportedly postponed the start-up of its brand new RFCC to the end of October, citing compressor issues, as per ChemOrbis. The new RFCC, which will have a propylene capacity of 160,000 ton/year, was initially scheduled to start operations in July of this year. In Thailand, IRPC was reportedly operating its new propylene plant in Rayong at 70% capacity after starting the plant up in late August and reaching on-spec output at the beginning of September. The company plans to raise its operating rate to 100% by the end of this month. The plant has a capacity to produce 100,000 tons/year of propylene.
As propylene prices were mostly unresponsive to the lower energy complex, Asian PP producers are maintaining their firm pricing strategies in global markets including China, Southeast Asia, Turkey and Egypt. In Turkey, import PP prices held stable over the week despite buyers’ hopes to see softer prices in the coming days. An Indian producer issued a weekly increase of $25-35/ton on its PP raffia prices for October shipments in order to cover the increase in costs which occurred over the past month. “We will not adjust our prices with daily changes in crude oil prices due to the volatility in the energy markets over the past few years. We are not feeling any sales pressure these days,” a producer source commented.
In China, two major Asian producers revealed their new October homo-PP prices with increases. An Indian producer lifted its prices by a cumulative amount of $60/ton last week. Meanwhile, a South Korean producer lifted their October prices to China by $20/ton.
In Southeast Asia, a Saudi Arabian producer revealed its October homo-PP offers with $50-70/ton hikes over September. A producer source told ChemOrbis, “We haven’t concluded any deals at our new prices yet as buyers prefer to take a wait-and-see attitude following the recent decreases in crude oil prices. Therefore, we expect buyers to make purchases on a needs only basis.”
A Southeast Asian producer lifted its October homo-PP prices in the region, leading a distributor to ask for $70/ton hikes. The producer blamed high costs and the rising trend in regional markets as the main reason for their price hikes.
In Egypt, the PP market remains on a firm note, driven by limited availability in the country. Local PP producer EPPC shut its 400,000 tons/year PP plant from mid-September to mid-October due for maintenance. Some converters had to halt their operations at their factories due to lack of sufficient PP availability.