SE Asian propylene extends gains, China olefins stabilize

Southeast Asian propylene prices continued on their uptrend, underpinned by a demand-supply imbalance that will take more time to readjust. An acute olefin shortage has resulted from an extended turnaround at Aster Chemicals’ Singapore-based 1.1 million tons/year cracker, as well as diminished availability from Malaysia’s PRefChem.

“SE Asian propylene and ethylene prices will remain firm until the supply squeeze eases, which may be possible in early October. At the moment, PRefChem is unlikely to have any product to offer. Propylene offers have climbed higher although bids have been slower to follow. Whilst there’s resistance, traders who are truly short, will have to pay up for cargoes they need,” noted a western trader.

Northeast Asian propylene and ethylene prices held steady. Traders anticipate the current prices to hold through October as supply within China and in South Korea will stay short.

The CFR SEA-China ethylene spread remains at $0/ton as prices in both regions are still at par. The CFR SEA propylene differential to China has narrowed to $0/ton on the hike in CFR SEA propylene prices.

SEA propylene climbs on more short covering, ethylene steady

SE Asian propylene prices have climbed higher this week, extending sharp gains since late August, driven by key traders buying spot cargoes to cover shortfalls for September delivery. This week’s $20/ton increase adds to the cumulative gains of $80/ton or 11% over three weeks. Traders were heard to have bought more cargoes for second-half September delivery at $790-810/ton CFR SEA.

“Producer offers are at low-to-mid $700s plus freight, and formula-based pricing works out to a monthly average price plus $20-30/ton margin. September deals which were transacted at fixed prices, were at low $700s/ton plus freight of $70-80/ton. Margins have improved, as October propane feedstocks are at $555-560/ton CFR Japan,” added the western trader.

The early September outage at PRefChem’s 300,000 bbl/day Pengerang refinery CDU had curtailed naphtha feedstock to its 1.29 million tons/year cracker. PRefChem was said to have purchased a prompt naphtha cargo to cover the shortage, with industry sources expecting the CDU to resume operations by this week. The Malaysian producer had restarted the 1.29 million tons/year Pengerang cracker in early July, following an extended shutdown starting in early February due to technical issues.

“Should PRefChem manage to restart the RFCC unit this week, it may be possible that they could offer spot cargoes at the end of September or in early October,” a local trader noted.

Aster Chemicals and Energy was initially expected to restart the 1.1 million tons/year ethylene cracker located on Bukom Island, Singapore in September. A fire at the cracker caused an unplanned extension of the cracker outage, which traders anticipate will most likely last through October. The cracker had been shut for a 45-day maintenance since early August. The cracker also produces 500,000 tons/year of propylene.

Vietnam’s Long Son Petrochemical had in late August, restarted the idled 1 million tons/year ethylene cracker, located at Ba Ria-Vung Tau which was shut since late October 2024. The cracker was earlier expected to stay offline through this year, traders commented. Traders said the Vietnamese producer has offered spot cargoes for September loading.

Bids for spot propylene climbed higher, to $780-790/ton CFR SEA whilst offers rose to $820-830 CFR SEA. Producer offers were reported in the low-to-mid $700s/ton on an FOB SEA basis. Ethylene spot offers were quoted at $860-870/ton CFR SEA whilst bids were heard at $820-830/ton CFR SEA.

As of September 17, spot propylene prices rose $20/ton from last week, and were assessed at $800/ton CFR SEA, while spot ethylene prices were flat from last week, and were assessed at $840/ton with the same terms.

NEA ethylene, propylene stay firm amid short supply

NEA/China ethylene and propylene prices have held at the higher levels since late July, bolstered by renewed demand from traders and retail buyers, as well as reduced availability. Chinese traders continue to monitor the unfolding supply crisis in Southeast Asia, fearing a contagion effect in Northeast Asia.

CFR NEA/China ethylene prices have traded at the $820-840/ton CFR levels since late July. The shrinkage in regional ethylene supply has lasted longer than traders have expected as the lifting of US restrictions on ethane exports to China had led to an oversupply in early July.

Spot propylene prices had risen a cumulative $40/ton or 5% since late July, rising from $760/ton CFR to $800/ton CFR NEA/China and have stayed at this benchmark over the past two weeks. Active trading was seen for both import ethylene and propylene, and local cargoes this week, traders commented.

Within China, domestic olefin supply has contracted. For propylene, various PDH plants, such as Shandong Zhenhua’s 750,000 tons/year PDH plant and Wanhua Chemical’s 900,000 tons/year Yantai-based PDH facility are undergoing maintenance.

China’s ethylene inventory in September has also decreased with more cracker turnarounds. Zhejiang Satellite shut the 1.25 million tons/year No 2 ethane cracker, based in Lianyungang in mid-August for planned maintenance of around 45 days. PetroChina Fushun Petrochemical shut its 800,000 tons/year cracker, located in Fushun, Liaoning in late August for a two month-long scheduled turnaround, traders commented.

Tighter supply in South Korea has persisted since early August, and continues to boost NEA olefin spot prices, commented a local Chinese trader. South Korea’s GS Caltex, LG Chemical and YNCC have maintained lower cracker run rates, and are operating the crackers at around 80% to 85%, the trader added.

Offers for imported ethylene were quoted at $860-870/ton CFR China against bids at $825-835/ton CFR China for September delivery. On floating price discussions, sell ideas were heard at premiums of $18-20/ton to CFR NEA assessments on CFR China main ports basis. Buy indications were heard at premiums of $10-15/ton to CFR NEA assessments on CFR China main ports basis.

Import offers for propylene were cited at $810-830/ton CFR China, whilst bids were heard at $780-790/ton CFR China for September delivery, traders reported. Propylene discussions in the East China/Shandong market were heard at CNY6,650-6,700/ton.

Sinopec maintained their ethylene list price at CNY7,150/ton, and propylene list price at CNY6,650/ton respectively. In East China, truck-based ethylene spot prices were stable, quoted at CNY7,000-7,100/ton.

As of September 17, spot ethylene prices were flat from last week, and were assessed at $840/ton CFR China. Spot propylene prices were also unchanged from last week, and were assessed at $800/ton with the same terms.

South Korea’s Q4 cracker turnarounds, lower run rates tighten NEA supply

South Korean supply has contracted due to lower cracker and PDH operating rates. YNCC’s current cracker outage and more upcoming cracker turnarounds in Q4 will keep South Korean olefin supply tight, aiding to underpin ethylene and propylene prices across NEA, including China.

YNCC shut the No. 3 naphtha cracker, located at Yeosu on August 8 due to margin concerns, traders reported. There is no confirmed restart date as yet. Operating rates at the other two Yeosu-based naphtha crackers are at around 80%. YNCC has three crackers located in Yeosu, which produce around 2.4 million tons/year of ethylene.

LG Chemical will shut its 1.3 million tons/year Daesan-based cracker from mid-October to early December for scheduled maintenance. LG Chemical has three crackers in Yeosu and Daesan, which produce some 3 million tons/year of ethylene. The producer has maintained run rates at the other two crackers at around 80%, traders commented.

Hyundai Chemical has scheduled a turnaround at its 900,000 tons/year Daesan-based cracker from mid-October to mid-December, according to traders.

S-Oil will be taking down its RFCC unit located in Onsan for a 45-day maintenance from mid-October to end November. The RFCC unit produces 200,000 tons/year of propylene.

GS Caltex, the second largest refiner after SKGC, cut operating rates at the Yeosu-based mixed-feed cracker to 85% in July, traders commented. The cracker was started up in June 2021 and produces 900,000 tons/year of ethylene and 425,000 tons/year of propylene. It was shut for debottlenecking in late September 2024 and ethylene capacity was expanded from 750,000 tons/year to 900,000 tons/year.