Asian propylene edges up, ethylene holds steady

Asian propylene prices managed to climb higher on some short covering of cargoes for H2 September delivery while spot ethylene prices have remained stable this week. Since June 19, both spot ethylene and propylene prices have recovered strongly but appear to be stalling at the current $830-840/ton CFR Northeast Asia/China levels.

A stronger than expected demand and pricing recovery across downstream polyolefins markets in China and SE Asia have also boosted current spot prices. Both PE and PP prices had slumped for most of the first half of 2023 but have been trending higher over the past two months. Meanwhile, Asian propane prices have ticked above $630/ton CFR Japan while naphtha has hit $670/ton CFR Japan.

Traders said that ethylene prices should have soared but for the constant flow of ex-USG deep-sea cargo arrivals into Asia. The Asian ethylene uptrend has opened the US-to-Asia arbitrage window since May, and there are no signs of the arbitrage window closing yet. With the availability of these US origin spot ethylene cargoes, Asian buyers have been able to diversify, bringing in the cheaper US ethylene cargoes to hedge against rising Asian spot prices. For August and September, a total of 208,000 tons of US-origin ethylene had been or will be shipped, all heading to Asia.

Spot ethylene prices were stable from last week at $830/ton CFR China and at $860/ton CFR Southeast Asia as of September 6. Spot propylene prices edged up $5/ton from last week to be assessed at $835/ton CFR China and at $855/ton CFR Southeast Asia as of September 6.


China’s new PDH plant start-ups lengthen Q4 supply

China’s olefins supply has stayed tight-to-balanced for most of the year due to reduced cracker and PDH plant operating rates. However, new PDH plant start-ups in September and Q4 will add some supply pressure, although this may be counterbalanced by extended maintenance turnarounds at several PDH plants.

Private sector-producer, Donghua Energy started up the Maoming, Guangdong-based 600,000 tons/year PDH facility in early September, according to industry sources. The PDH plant is currently running at reduced rates due to poor economics, traders said.

Meanwhile, Zhejiang Huahong has delayed the start-up of its 450,000 tons/year PDH facility located at Jiaxing, to the latter part of Q4, 2023, according to industry sources.

Additionally, state-owned Sinopec Tianjin will also be starting up its 600,000 tons/year PDH plant located at Tianjin only in Q4, 2023. Traders said that these new PDH plant start-ups have been delayed due to poor profitability, as margins have been squeezed due to higher feedstock costs. Propane prices have climbed sharply higher and are now hovering above $630/ton CFR Japan.

However, several Chinese PDH plants have extended maintenance shutdowns, which will temper the lengthening propylene supply.

Private sector-producer, Wanhua Chemical shut its Yantai, Shandong-based 750,000 tons/year PDH facility in mid-August for a maintenance turnaround of around 40 days, with the restart likely to be in late September, according to industry sources. The producer also operates a steam cracker with an ethylene capacity of 1 million tons/year and a propylene capacity of 520,000 tons/year, also located at Yantai, Shandong.

Private sector Fujian Meide Petrochemical (Fujian Soft Packaging) also took down its 660,000 tons/year PDH plant in Fuzhou, Fujian on August 17 for a month-long maintenance turnaround, said traders.

Liaoning Kingfa had a plant maintenance in early September at its 600,000 tons/year PDH plant located in Panjin, Liaoning. The PDH plant will be shut for around 30 days, traders noted.