03 September 2012 07:24 [Source: ICIS news]
By Judith Wang
SINGAPORE (ICIS)--Spot propylene (C3) prices in Asia increased to a four-month high, and may continue rising in the coming weeks on the back of higher crude and derivative product values, as well as concerns about tight supply, industry sources said on Monday.
On 31 August, propylene prices were assessed at $1,380-1,415/tonne (€1,090-1,118/tonne) CFR (cost and freight) ?xml:namespace>
Crude prices at above $90/bbl, accompanied by rising naphtha prices boosted sentiment in the olefins market, buyers and sellers said.
Rising prices in downstream derivative products also lent support to propylene prices.
Polypropylene (PP) flat yarn values increased by $10-20/tonne week on week to $1,380-1,420/tonne CFR China on 31 August, while propylene oxide (PO) edged up by $20-30/tonne to $1,670-1,750/tonne CFR China over the same period, according to ICIS.
“I think propylene will increase in [the] coming weeks as this round [of] price growth [for] downstream products since late July and early August will probably sustain till September, which is usually peak chemical manufacturing season,” said an end-user in south
Concerns about a possible tightening of propylene supply may also drive up prices, market sources said.
The unit can produce 400,000-450,000 tonnes/year of propylene, which will be supplied to its domestic customers, with any excess supply likely to be exported.
“If CPC could not start up its RFCC in October, then the market will [be] tight again as some new downstream plants, including phenol-acetone and oxo-alchohols [units], will start up in October and November in China. By then, the demand for propylene will rise, and prices may increase again,” a trader said.
Industry players, however, said that the propylene’s price gains may be limited if actual demand from downstream markets failed to pick up significantly.
“Currently, the general demand for PP is not strong enough amid
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