Some China’s refineries selling more propylene on spot for profit

01 February 2012 07:47  [Source: ICIS news]

SINGAPORE (ICIS)--Several refineries in China’s eastern Shandong province are selling more propylene in the spot market by curtailing supply to their downstream polypropylene (PP) powder units to earn more profit because of higher C3 prices, industry sources said on Wednesday.

China’s domestic propylene prices were traded at CNY (yuan) 10,800-10,900/tonne ($1,712-1,727/tonne) ex-tank in Shandong, while PP powder prices were at CNY (yuan) 10,900-11,000/tonne, according to traders.

PP powder price and propylene price should keep a price gap of at least CNY600/tonne, which could ensure selling PP power can make money.

But the gap has disappeared in the last few weeks, sources said.

From the second half of January, several refineries in Shandong including Hengyuan Petrochemical, Jingbo Petrochemical and Luqing Petrochemical started to sell propylene directly into market instead of feeding to their downstream PP powder units, sources added.

“We have stopped PP powder unit in the middle January and sell around 200 tonnes propylene into market each day,” a company source in Hengyuan Petrochemical said.

Hengyuan Petrochemical located at Dezhou, Shandong province, has a 200,000 tonne/year gas fractionation unit and a 100,000 tonnes/year PP powder unit.

“Our PP powder unit is operating at lower rate, and we can sell more propylene into market,” a company source in Dongming Petrochemical said.

Dongming Petrochemical located in Heze, Shandong operates a 600,000 tonne/year gas fractionation unit and a 50,000 tonnes/year PP Powder unit.

At least 500-600 tonnes of new propylene is expected to be supplied to the market on a daily basis, which will put some downward pressure on propylene price, market sources said.

($1 = CNY6.31)

By: Lilian Hua

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