08 April 1996 00:00 [Source: ACN]
PROPYLENE prices have soared above US$500/tonne cfr SEA as unexpected plant reductions in South Korea exacerbate already tight supply. Spot purchases have already reached US$530/tonne cfr Indonesia and US$420/tonne fob Korea as PP producers scramble for material. Offers are now US$580-600/tonne cfr SEA and US$470-480/tonne fob Korea.
South Korean supply was unexpectedly reduced by a ten-day unscheduled shutdown at Honam Oil Refinery's fluid catalytic cracking unit in March. In addition, Tongyang Nylon's cracker has been forced to operate at 80% because of poor downstream demand for ethylene glycol.
Yukong will have no material for export until July as it is supplying other South Korean cracker operators with propylene in time-swap agreements. Its own cracker will have scheduled maintenance in October.
Sabic has had almost no propylene for export to Asia since it started 2-ethylhexanol production late last year. Deep-sea availability from the US, Brazil and Mexico is also severely limited, said traders.
Import tariffs for PP are helping the propylene hikes. India has a 40% tariff and 25% duty on PP which would allow buyers to pay above market levels for propylene and still produce PP profitably, a source said.
Reliance Industries has already purchased propylene ahead of the expected May-June commissioning of its new 180 000 tonne/year PP plant at Hazira, Gujarat, but may be unable to secure sufficient material to start up and operate in Q2's tight markets.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.