FocusAsia C3 offers down $40/t; may extend falls on surplus supply

04 October 2012 07:33  [Source: ICIS news]

By Becky Zhang

SINGAPORE (ICIS)--Offers for Asian propylene (C3) fell by as much as $40/tonne (€31/tonne) this week as the unexpected shutdown of a major downstream acrylic acid facility in Japan freed up supply in the regional spot market, industry sources said on Thursday.

Nippon Shokubai’s 460,000 tonne/year acrylic acid plant at Himeji, Japan, was shut by an explosion on 29 September. With no firm restart date for the plant, propylene prices may continue to fall, they said.

Propylene is the primary raw material for acrylic acid. One tonne of acrylic acid require 600-800kg of propylene.
On Thursday, propylene was being quoted at $1,350-1,360/tonne CFR (cost and freight) NE (northeast) Asia for end-October and November-loading parcels. Last week, offers were at $1,380-1,400/tonne CFR NE Asia.

In the week ended 28 September, propylene spot prices were assessed at $1,370-1,390/tonne CFR NE Asia, ICIS data showed.

“There will be over 20,000 tonnes per month of propylene surplus because of the incident, which is huge to [the regional] propylene market,” a key Japanese trader said.

The trader is facing mounting sales pressure because of scant buying requirement from China and Taiwan at the moment.

China is closed for Mid-Autumn Festival and National Day holidays from 30 September to 7 October.

“Most of the end-users in China have stocked up on sufficient inventories ahead of the holidays,” a major Chinese trader said.

But Chinese buyers may not actively seek spot cargoes given expectations that prices will fall further.

“We received offers from Japan, but we cannot take in more cargoes as we are fully covered until November. Besides, Taiwan’s local propylene supply will increase after CPC’s start-up,” a Taiwanese end-user said.

Taiwanese producer CPC Corp plans to start up its residual fluid catalytic cracker (RFCC) at its Dalin refinery in late October. The RFCC can produce 400,000-450,000 tonnes/year of propylene.

“The impact of Nippon Shokubai’s incident may not be as serious as expected,” another key Japanese trader said.

Extended maintenance at JX Nippon Oil’s Kawasaki cracker in Japan should be an offsetting factor to the expected propylene surplus, the trader said.

JX Nippon Oil has delayed the restart at the 460,000 tonne/year naphtha cracker by more than a week to around 8 or 10 October.

Idemitsu Kosan, which one of the major suppliers of propylene to Nippon Shokubai, is mulling cutting production if the shutdown of the Hemiji acrylic acid plant is prolonged, a company source said.

“Firm prices of polypropylene (PP), the major derivative market for propylene, will also lend some support to propylene prices,” the second Japanese trader said.

Asia's homo grade polypropylene prices were assessed at $1,420-1,480/tonne CFR China Main Port in the week ended 28 September, according to ICIS.

($1 = €0.78)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
Request a free ICIS sample report for the latest prices and development in the Asian petrochemical markets

By: Becky Zhang
+65 6780 4359

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