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Spot C3 prices in Europe and Asia fall to new lows as supply lengthens

by Başak Ceylan -
  • 19/11/2019 (07:59)
Spot propylene prices in Asia continued the downward trend that began in the second quarter and fell to multi-year lows last week. The situation in the European market was similar. Prices moved further down to the levels not seen since 2017, mostly as a result of the imbalance between supply and demand.

Supply length persists as demand struggles to keep pace in Asia

More propylene supply began flowing into the already-ample markets after the recent restarts at Chinese and South Korean plants. With this increased supply of propylene outstripping regional demand, spot prices on FOB Korea basis have recently slumped to their lowest since June 2017.

According to ChemOrbis Production News, Jiutai Energy Group and Shenhua Baotou Coal Chemical Industry resumed operations at their respective propylene units in early November, and more recently, Oriental Energy and Tianjin Bohai Chemical’s PDH units returned to production. In addition to these restarts in China, Lotte Chemical’s steam cracker in South Korea returned to production after a month-long turnaround.

European C3 market down 30% to-date since recent peak in June

The downstream propylene market in Europe has been eroded by an imbalance between high supply and low demand from derivative markets, with prices ending last week at 30% below a recent peak in June. The weekly average data obtained from ChemOrbis Price Wizard shows that prices on FD NWE basis recently fell to their lowest levels since January 2017.

Spot prices trade at 13% discount to Nov contract price in Europe

In the week ended November 15, spot propylene markets in Europe posted the third weekly drop, taking the cumulative reduction to around €70/ton. This recent decline has widened the spot discount to the latest contract prices to €110/ton, up from a gap of around €40/ton in early November.
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