Higher energy prices so far in 2012 have lent support to propylene prices, and the outlook points to sustained strength unless gasoline and naphtha prices reverse their latest uptrend.
Also lending support to propylene is a busy cracker turnaround season in the US in 2012. Three US crackers were taken off line in January-February, while at least another four units are expected to have maintenance in the next few months.
In Europe, propylene prices are expected to track naphtha developments over the next three months as crackers attempt to preserve margins.
The second quarter is also traditionally a good period for petrochemical demand in Europe, although customers remain concerned that the recent high prices could jeopardise demand, which remains fragile amid the ongoing economic uncertainty.
The same applies to Asia. Propylene spot prices in northeast Asia could move higher in the near term, supported by the recent gains in feedstock naphtha prices. In addition, upcoming cracker turnarounds in the region in March-May may provide additional support to the market.