SEA ethylene, propylene slip further; NEA prices steady near 2-year lows

SE Asian propylene extended losses this week, with prices driven lower by weak demand and lengthening supply. For ethylene, Indonesia’s LINE project start-up has exacerbated bearish sentiment on rising supply further depressing current low spot ethylene prices.

“Traders and buyers are holding out on purchases and unwilling to commit to imports as the market perception is that oversupply will likely drive spot ethylene prices lower,” noted a western trader.

NE Asian ethylene and propylene spot prices have managed to hold steady at near two-year lows, but demand fundamentals remain weak, following the latest round of tariff agreements between the US and China that will last for 90 days. The US will impose 30% tariffs on Chinese imports. China has agreed to reduce tariffs imposed on US imports, including US propane, to 10%.

“The previous 125% tariff on US propane had provided buyers the incentive, as well as urgency to increase their imports of Middle East propane, and propane of other origins, as the prohibitive tariff would shrink China’s domestic propylene supply,” commented a Chinese trader. “Since the tariff on US propane has now been cut to 10%, there is less motivation for buyers to increase their imports of Mid-Eastern propane, and bids have also fallen,” added the trader.

The spread between CFR SEA and CFR China ethylene levels narrowed to $70/ton this week on the slippage in SEA ethylene prices. The CFR SEA propylene premium to CFR China has narrowed to $0/ton this week on the further slide in SEA propylene prices.

SEA ethylene, propylene sink deeper into bear market

Spot propylene prices continued to slide into the second week, while ethylene prices caved under pressure this week. The near-term bearish perception is that both ethylene and propylene will lengthen and the growing oversupply will push spot prices lower and cap any upside potential, noted the western trader.

The anticipated start-up of the Lotte Chemical Indonesia New Ethylene (LINE) Project in June has spooked traders and buyers in SEA. The LINE Project is expected to increase the production capacity of Lotte Chemical Titan Holding Bhd (LCT) by 65% to 5.8 million tons. The project will add new ethylene capacity of 1 million tons/year and propylene capacity of 520,000 tons/year. The LINE project was scheduled to start up in Q1, 2025, according to industry sources.

Traders have remained on the sidelines, closely monitoring the impact that the June start-up of the LINE project will have on spot ethylene and propylene prices. Reports of Mid-Eastern cargoes heading into Indonesia have exacerbated bearish market sentiment.

Adnoc was reported to have sold two propylene cargoes for May shipment, with one cargo headed to Indonesia, and the other to China. Sabic was also heard to have sold several propylene cargoes which were destined for China and Indonesia. There were a total of 6 to 7 cargoes sold, traders commented.

Indonesia’s Chandra Asri was reported to have bought several propylene cargoes but had to resell spot ethylene cargoes to their contract buyers.

Offers for propylene were cited at $810-820/ton CFR SEA, whilst bids slipped to $790-800/ton CFR SEA. Ethylene spot prices also edged lower. Bids were heard at $830-840/ton CFR SEA, whilst offers were cited at $860-870/ton CFR SEA.

Spot propylene prices slipped $10/ton from last week, and were assessed at $800/ton CFR SEA. Spot ethylene prices also ticked down $10/ton from last week, and were assessed at $850/ton CFR SEA as of May 14.

NEA ethylene, propylene stay flat

NEA ethylene and propylene prices held steady near their two-year lows despite the latest round of US-China tariff discussions, which removed the fear and uncertainty that affected spot olefin prices during the initial imposition of drastic tariffs. Regardless, spot CFR China ethylene prices had fallen $130/ton or 14% since late February, following news that China will not impose the 125% tariff on US ethane imports.

In the latest tariff agreements negotiated between the US and China that will last for 90 days, the US will impose 30% tariffs on Chinese imports. China has agreed to reduce tariffs imposed on US imports, including US propane, to 10%.

Traders said the earlier Adnoc and Sabic spot cargoes sold to China were concluded around the $810-820/ton CFR China range. Currently, there is no interest in taking imported propylene cargoes unless they are in the mid-to-high $700s/ton CFR China.

Bids and offers for imported and domestic ethylene were flat this week. Bids were quoted at $760-770/ton CFR China. Offers were quoted at $790-800/ton CFR China range for May delivery. Floating price discussions were heard at premiums of low single-digits and high single-digits to CFR Northeast Asia assessments on CFR China main ports basis for Japanese and South Korean origin cargoes respectively.

There were reports of more Japanese-origin ethylene spot cargoes offered this week due to downstream plant issues, traders commented.

Local truck-based ethylene spot prices were stable at CNY7,100-7,200/ton Propylene discussions in the East China/Shandong market were also stable, quoted at CNY6,500-6,650/ton.

Spot ethylene prices were flat from last week, and were assessed at $780/ton CFR China. Spot propylene prices were also stable from last week, and were assessed at $800/ton CFR China as of May 14.

Supply remains tight with Japanese crackers in turnarounds, and lower run rates

NEA olefins supply across South Korea and Japan will stay tight-to-balanced as crackers will maintain lower rates while several will enter maintenance turnarounds. Producers have maintained lower cracker run rates to ensure regional supply stays at equilibrium.

Idemitsu Petrochemical has cut cracker run rates to around 85%, according to traders. Traders said the 700,000 tons/year Tokuyama-based cracker is running at around 85% while the Chiba-based 450,000 tons/year cracker is operating at around 80%.

Showa Denko has also reduced operating rates at the Oita-based cracker to 75% to 80%, commented traders. The Oita-based cracker produces 700,000 tons/year of ethylene and 500,000 tons/year of propylene.

Mitsui Chemical plans to take down the 600,000 tons/year Chiba-based cracker for a scheduled turnaround from May to June of around 45 to 60 days, according to sources. The Chiba-based cracker also produces 300,000 tons/year propylene.

Mitsubishi Chemical will have a scheduled maintenance turnaround for the 570,000 tons/year cracker based at Mizushima from May to July, traders commented.