Updated to mid-November 2009
Asian market review by Steve Tan, ICIS pricing
Asian propylene firmed on the back of a tighter supply post National-Day holidays in China. Spot prices edged up around $20-30/tonne each week as cutbacks in Japanese production meant traders had to rely solely on Korean exports, which were priced on the basis of FOB (free on board) Korea.
Cracker operators such as LG Chem, YNCC and Honam Petrochemical were active exporters but kept FOB Korea offer levels almost on par with CFR (cost and freight) based prices, hence maintaining constant upward pressure on prices. Due to firm demand from China and relatively high domestic prices, importers into China had little choice but to accede to higher prices each week.
December propylene shipments hit a high of $1,115/tonne CFR China, which was almost on par with polypropylene prices. Southeast Asian prices were also up in tandem with those in China, but maintained a $50/tonne gap due to strong buyer resistance from polymer makers.
European market review by Nel Weddle, ICIS pricing
The European propylene supply and demand balance began to ease in the mid-August to mid-November period having reached a peak in July and early August.
Cracker outages, both planned and unplanned, during the August-October period as well as tendency to crack lighter feedstocks in the summer had tightened availability.
Contracts were settled at €778/tonne FD (free delivered) NWE (northwest Europe) for September, up €93/tonne, the strong increase to highlight the tight supply, better than expected demand and firmer feedstock prices. October settled down at €750/tonne and November declined further to €740/tonne as the market became more balanced and feedstock levels waned.
After spot prices peaked at €800/tonne CIF (cost insurance freight) NWE in early August, prices held fairly steady for the remainder of the period with openly reported spot activity virtually non-existent. Prices were usually pegged around contract value, and the differential between coastal and inland prices eased as low water levels on the Rhine became less of a logistical headache.
US market review by William Lemos, ICIS pricing
US propylene contracts settled 2.50 cents/lb ($55/tonne) higher in November on the back of higher production costs, following a jump in energy prices.
US chemical-grade propylene (CGP) contracts in November settled at 48.00 cents/lb, while polymer-grade propylene (PGP) contracts were agreed at 49.50 cents/lb.
PGP contracts in August were at 45.00 cents/lb and CGP at 43.50 cents/lb.
Refinery-grade propylene (RGP) spot prices in mid-November were at around 46.00 cents/lb, up from 37.25 cents/lb a month earlier but steady with prices in mid-August.
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Propylene
Uses and Outlook
The dominant outlet for propylene is polypropylene (PP), accounting for around 63% of global propylene consumption. PP is one of the most versatile of the bulk polymers due to a combination of good mechanical and chemical properties. Hence its applications are very wide.
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The two main sources of propylene are as a byproduct from the steam cracking of liquid feedstocks such as naphtha as well as LPGs, and from off-gases produced in fluid catalytic cracking (FCC) units in refineries. The remainder of propylene is produced using on-purpose technologies such as propane dehydrogenation (PDH) and metathesis.
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