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Spot propylene prices lose ground in global markets

  • 26/04/2017 (13:17)
Global propylene costs in major markets including Asia, Europe and the US have been following a softening trend since March. Lower price levels were in tandem with weak downstream PP market, some cracker restarts as well as reduced energy costs, according to market players.



Source: ChemOrbis Price Wizard

In Asia, spot propylene prices edged down by $15/ton week over week to be reported slightly below $800/ton FOB Korea threshold, while they indicated a cumulative drop of $45/ton from early April. Players attributed the ongoing softening in spot prices to weak demand from the downstream markets as well as lower propylene consumption at the PP units due to the environmental inspections. In addition, the weakening crude oil markets and higher stock levels in China’s PP market have weighed down on the spot propylene prices.

Similarly, spot propylene costs in Europe softened by around €10/ton on FD NWE basis over the week. The drop, meanwhile, was around €25/ton with respect to the beginning of April. Players comment that lower spot prices are led by the increasing supply levels in line with the several cracker restarts across the region as well as muted market activities ahead of the awaited May propylene contracts, which might be settled with a rollover or a slight increase from April.

Propylene prices in the US witnessed a larger decline than in other regions, in the meantime. Spot polymer grade propylene prices dropped by 3.5 cents/lb ($77/ton) FD USG. The ongoing bearish trend in spot prices stemmed from the rising supply levels as well as weak demand from the downstream markets. Regarding the monthly contract settlements for April, players have continued to voice weaker expectations, which are indicating larger decreases of 5-10 cents/lb ($110-220/ton) from the initial expectations.



Source: ChemOrbis Price Wizard

Lower energy complex and naphtha prices also contributed to the globally softening trend for propylene. NYMEX crude oil futures settled slightly below $50/barrel threshold at the end of last week and have been hovering below that level since then. As of Monday, NYMEX futures indicated an approximate weekly drop of $3.5/bbl, while ICE Brent crude oil futures were down by almost $4/bbl week over week. Spot naphtha prices followed suit while they have recently indicated slight drops between $15-25/ton in Asia and Europe from early April.

Chinese Tianjin Bohua restarted its PDH unit in early April, while Taiwanese CPC is also set to resume operations at its two crackers in early May. In Europe, Dow Chemical, Borealis, Total and Sabic are set to restart their crackers and propylene units nowadays following maintenance shutdowns. Plus, Borger Refinery took its FCC unit in the US offline for a turnaround until end April.

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