Spot propylene moves in opposite directions in Asia and Europe

Spot propylene prices appear to be moving in polar directions with prices in Asia heading north on renewed demand and tighter availability while in Europe they remain on a downtrend due to healthy supplies.

Asian markets show signs of recovery

Spot propylene prices on CFR China basis embarked on a slate of increases by the middle of May this year and have recently rose to their highest since February. Prices on FOB South Korea basis also perked up following a period of volatility in late June.

What drove prices up?

Tighter supply stemming from the planned and unplanned shutdowns in May and June helped buying interest return to the market. As can be seen in ChemOrbis Production News, propylene plants in the Asia-Pacific region have a busy schedule of maintenance this month, with capacities over a million tons of propylene per year slated to be offline until the end of the third quarter.

Among the producers that will start a turnaround is the Taiwanese major, Formosa Petrochemical. The company will shut its steam cracker with 515,000 tons/year of propylene capacity by next month, possibly tightening the market if the current firm demand continues.

European markets paint a different picture

Unlike the markets in Asia, the European spot propylene market has been under the pressure of the weak demand and comfortable supplies since early June. The weekly average data obtained from ChemOrbis Price Wizard show that prices on FD NWE basis recently fell to their lowest levels since December 2018.



Declining spot prices already reflected on July contracts

The downturn in the spot market has already found a reflection on July propylene contracts as they settled with a €80/ton ($91/ton) decrease in Europe in late June.