APIC ’10: US propylene long but Asia not far behind - buyer

13 May 2010 12:33  [Source: ICIS news]

MUMBAI (ICIS news)--The Asian propylene market is likely headed for a downturn in the coming months, similar to the one in the US market, due to the start-up of several crackers in the region, a buyer said on Thursday.

With the cracker start-ups in Asia expected to bring several million tonnes of capacity on stream this year, propylene would start to get long, said the buyer, who was speaking on the sidelines of the 2010 Asia Petrochemical Industry Conference (APIC) in Mumbai, India.

Asia would add some 7m tonnes/year of ethylene capacity in 2010, according to a consultant at the conference, with 4m tonnes/year coming on stream in China and another 3m tonnes/year in southeast Asia.

The buyer said that the latest drop in US propylene prices opened the arbitrage window with Asia, adding that at least one cargo, but possibly two, of polymer-grade propylene (PGP) from the US had been fixed for the region.

One of the parcels was sold in the mid-$1,200s/tonne (€948/tonne) CFR (cost and freight), which was around $50/tonne below the price in Asia at the time, the source said.

But the US-Asia arbitrage window – if it is still open – could be short-lived.

Market participants said they predict a rebound in US propylene prices, citing a new increase in the use of light feedstocks by US crackers.

US crackers in April relied on light feedstocks for around 85% of their feeds, up from 80% in March, according to a US consultant, who attributed the increase to a jump in the use of the feedstock propane.

APIC takes place in Mumbai from 13-14 May.

($1 = €0.79)

For more on ethylene and propylene, visit ICIS chemical intelligence
Read John Richardson and Malini Hariharan’s Asian Chemical Connections blog
To discuss issues facing the chemical industry, go to ICIS connect

By: William Lemos
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