FocusAsia PP supply to remain tight through September

10 August 2010 08:12  [Source: ICIS news]

By Chow Bee Lin

Asia PP prices moving upSINGAPORE (ICIS)--Asia’s polypropylene (PP) supply may remain tight through September on scheduled plant shutdowns in China, and production cuts in Taiwan due to unexpected outages at Formosa Petrochemical Corp’s (FPCC) upstream facilities, industry sources said on Tuesday.

“A general expectation that PP supply will be tight through first half October spurred intense buying interest and pushed prices sharply higher last week,” said a key trader in east China.

The benchmark injection and yarn grades were sold or discussed at $1,180-1,240/tonne (€897-942/tonne) CFR (cost and freight) China and $1,220-1,260/tonne CFR southeast Asia in the week ended 6 August, $50-70/tonne higher from the previous week, according to ICIS.

The tight PP supply in China was also due to its consistently lower PP imports from March to June this year, local distributors said. (see graph below for details)

In China, Liaoning Huajin Tongda Chemicals’ PP plant has been shut from 20 July for 20 days, Yangzi Petrochemical’s 400,000 tonne/year PP plant in Nanjing was on a 20-day turnaround beginning 8 August, and Daqing Petrochemical's 300,000 tonne/year PP plant at Heilongjiang will be shut for a month-long turnaround from 20 August  

The shut downs at these three plants was expected to tighten PP supply in China, distributors said.

Formosa Plastics Corp (FPC) was expected to shut down its 450,000 tonne/year PP plant at Ningbo, eastern China, in late August for a month-long planned maintenance, distributors said.

The tight supply in China was also attributed to the lower average production rate in the first and second quarters of the year , a Chinese trader said. (see table for details)

The outage of major Saudi producer, Petro Rabigh’s 700,000 tonne/year PP plant in Saudi Arabia also contributed to the supply concern, Asia’s traders said.

Some buyers in southeast Asia hoped the tight supply would be eased by new supply from HMC Polymer in Thailand and Polytama Propindo in Indonesia, but others doubted these new capacities would come on stream in time to alleviate the supply shortages.

HMC Polymer was expected to start up its new 300,000 tonne/year PP plant at Mab Ta Phut only in October when its upstream propane dehydrogenation (PDH) unit receives propane gas from PTT Chemical.

PTT Chemical was unable to supply propane to HMC Polymers’ new PDH plant any earlier as its No 6 gas separation unit was among several major petrochemical projects in Rayong province that were suspended under a court ruling on environmental grounds, they said. 

Polytama Propindo, which was running its 270,000 tonne/year PP plant at around 85% capacity due to an on-site shortage of propylene, would ramp up production in September if it received additional propylene from Pertamina, a company source said.

Pertamina was expected to be able to offer additional propylene when its new metathesis begins commercial production in September.

HMC Polymers and PTT Chemical were not immediately available for comment. 

China’s PP production rate (Source: National Bureau of Statistics of China)


Average PP production rate%

2009 Q1


2009 Q2


2009 Q3


2009 Q4


2010 Q1


2010 Q2



($1 = €0.76)

For more on PP visit ICIS chemical intelligence
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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Chow Bee Lin
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