Propylene Methodology

Propylene is a colourless, highly flammable gas. It is produced by several routes, the most common of which is as a co-product of ethylene production from steam crackers. Propylene is also produced through fluid catalytic cracking (FCC) of feedstock, usually vacuum gas oil for gasoline production. This is the major source of supply in the US. Output from FCCs is not of a sufficiently good quality to be usable for chemical applications and upgrading is needed through a splitter for most chemical applications. Propylene can also be produced by the on-purpose de-hydrogenation of propane.

Propylene consumption is dominated by polypropylene which accounts for 60% of global consumption. Other important derivatives include acrylonitrile, oxo alcohols, propylene oxide, cumene and acrylic acid. Other applications include oligomers, iso-propyl alcohol and fine chemicals.

Propylene is highly flammable and needs to be stored in pressurised or refrigerated tanks.

ICIS pricing quotes propylene in Europe, Asia-Pacific (including China) and the US Gulf.

Frequency:

Published weekly on Fridays and a Propylene Daily (Asia) report is published Mondays-Fridays

Propylene (EUROPE)

Weekly Price assessments:

Propylene Monthly Contract Prices

• FD NWE (EUR/MT & conversion to US CTS/LB)

Propylene Chemical Grade Spot Prices

• FD NWE (EUR/MT & conversion to US CTS/LB)
• CIF NWE (EUR/MT & conversion to US CTS/LB)

Propylene Polymer Grade Spot Prices

• FD NWE (EUR/MT & conversion to US CTS/LB)
• CIF NWE (EUR/MT & conversion to US CTS/LB)

Propylene (ASIA-PACIFIC)

Propylene Daily Spot Prices

• CFR S.E.Asia (USD/MT & conversion to US CTS/LB)
• CFR N.E.Asia (USD/MT & conversion to US CTS/LB)
• FOB N.E.Asia (USD/MT & conversion to US CTS/LB)

 

Weekly Price assessments:

Propylene Spot Prices

• CFR N.E.ASIA (USD/MT & conversion to US CTS/LB)
• CFR CHINA MAIN PORT (USD/MT & conversion to CTS/LB)
• CFR S.E.ASIA (USD/MT & conversion to US CTS/LB)
• FOB NE ASIA (USD/MT & conversion to US CTS/LB)
• FOB KOREA ASIA (USD/MT & conversion to US CTS/LB)
• FOB SE ASIA (USD/MT & conversion to US CTS/LB)

 

 

Propylene (CHINA)

Weekly Price assessments:

• SHANDONG EX-TANK (CNY/MT)
• EAST CHINA EX-TANK (CNY/MT)
• CFR CHINA MAIN PORT (USD/MT)

Propylene (US GULF)

Weekly Price assessments:

Propylene Monthly Contract Prices (FD):

• CHEMICAL GRADE (US CTS/LB & conversion to USD/MT)
• POLYMER GRADE (US CTS/LB & conversion to USD/MT)

Propylene spot prices (FD):

• PROPYLENE CHEMICAL GRADE (US CTS/LB & conversion to USD/MT)
• PROPYLENE POLYMER GRADE (US CTS/LB & conversion to USD/MT)
• PROPYLENE REFINERY GRADE (US CTS/LB & conversion to USD/MT)

General Information:

Assessment window: Price assessments are based on information supplied by market participants through the week up to close of business on Fridays at 1800 hours in London, Singapore, Shanghai and Houston.

Daily assessments are based on information gathered throughout the day up to the close of business at 1730 hours in Singapore.

Specification: A minimum purity of 99.5% is assumed for polymer grade and 94% for chemical grade (93% in the US).. The refinery-grade price quote in the US is for product with a minimum purity of 60% and is quoted on a contained basis. (The propane portion of the stream is valued and sold separately). The price assessments for the daily and weekly Propylene (Asia) reports are based on polymer grade propylene with an assumed purity of 99.5%. There are some producers in Asia with integrated derivative polypropylene (PP) plants that guarantee a minimum propylene purity of 99-99.4%. If deals occur for such propylene cargoes, they will tend to be placed at the lower end of the price range.  In the absence of Asian polymer grade deals, chemical grade propylene deals may be taken into consideration after normalization at the discretion of the editor.

The weekly Propylene (China) report focuses mainly on polymer grade propylene with a minimum purity of 99.5%. However, in Shandong, some producers are selling propylene with a purity of between 99-99.6%, which is not strictly polymer grade material as defined by international markets.

Timing: Cargoes loading or delivered four-six weeks forward from the date of publication. For Asia, FOB assessments take into account cargoes loaded two-to-six weeks from the date of publication, and CFR assessments take into consideration cargoes delivered two-to-six weeks from the date of publication.

Terms: 30-90 days after bill of lading date. In the domestic Chinese market, deals are mainly done on a telegraphic transfer (TT) basis.

Standard cargo size: Typical pressurised cargo sizes in Europe range between 1,000-2,000 tonnes. In all reports, only sales in excess of 1,000 tonnes are taken into consideration for inclusion in bulk spot assessments. Inland European business refers to: pipeline deals; barge deals, typically up to 1,700 tonnes; rail tank and truck car business, typically between 20-25 tonnes per car.

Pressurised cargoes in Asia range between 1,200-1,800 tonnes while the most widely traded volumne size is around 1,500 tonnes. Larger-sized refrigerated cargoes are also traded and tend to range between 3,000-9,000 tonnes. Spot quotes are representative of polymer grade trades in either pressurised or refrigerated form.

Domestic sales in China are typically done on a lorry-tank basis and each lorry-tank can accommodate around 20-25 tonnes of propylene.

Typical pressurised spot cargos in US range between 25-50 thousand barrels for refinery grade and 3-5 million pounds for polymer and chemical grade.

Assessment basis: The propylene weekly price assessments are based on information gathered throughout the week (Monday to Friday) from producers, traders, end-consumers and the shipping market. The assessments take into consideration confirmed deals, reported deals, firm offers and bids, buy and sell indications, and rumoured deals.

The Propylene Daily report (Asia) covers spot deals on a CFR NE Asia, CFR SE Asia and FOB NE Asia basis. The assessment takes into account confirmed deals, bids and offers and the surrounding demand supply factors. The text reflects market trades, production news and market discussions.

The Propylene weekly report (China) covers import deals on a CFR basis and tracks domestic prices in the country.

In the domestic Shandong market, spot activities are dominated by sales from refineries in Shandong to end-users.

In eastern China, our assessment is based on energy major Sinopec’s propylene sales prices and the prices of imported material sold by local distributors.

The report also includes a table of list prices from major producers in the country. We provide information on Sinopec’s ex-tank prices in east and south China. We also provide the ex-works prices of producers in Shandong and northwest China.

All efforts are made to confirm pricing levels with the respective buyer and seller before price assessments are changed. In the absence of confirmation and/or trades, price ranges may be changed at the discretion of the editor to better reflect levels at which trading activity could take place. Consideration is also given to all factors potentially influencing the price of propylene at any given time, including supply/demand information; feedstock prices and derivative market prices.

In Europe, contract prices are fixed on a monthly basis. Monthly quotes were first introduced in January 2009. The quarterly and the bi-monthly contract quote was discontinued in Q4 2008.  

The contract price is negotiated between independent producers and their consumers from a broad spectrum of derivative sectors and is agreed on a gross basis. This base price will usually be subject to discounts relating to volume size and/or delivery terms, but these discounts are agreed on a private and confidential basis. The contract price is published only when direct confirmation from two different producers and consumers, i.e. “2 + 2”, has been received from the parties concerned.

 It is understood that ICIS pricing price assessments are often used as a benchmark for spot/contract propylene trades in the European and Asian markets, on an ICIS average +/- alpha basis.

 As a result, special emphasis is given to ensuring that the ICIS average spot net price is a number that can be readily agreed upon by as wide a cross-section of the market as possible. European coastal CIF and inland FD prices are assessed on separate bases, but consideration is given to the movement of material from the coast inland, especially by barge and often into Germany. Only outright spot deals, as opposed to swap trades, are taken into account for the weekly assessment. For chemical grade propylene (CGP), spot activity is limited and prices mainly move on market sentiment.

In Asia, netback calculations (CFR prices derived from FOB numbers + freight) are not usually considered sufficient to warrant an automatic adjustment of CFR assessments on the basis of open market freights. The use of Contract of Affreightment (COA) vessels in Asia-Pacific and the need for employment can lead to below-market freight components to apply. ICIS pricing prefers to adjust assessments on a like-for-like basis, CFR for CFR, FOB for FOB. Similarly southeast Asian price assessments are not adjusted on northeast Asian prices + freight component, or vice versa.

However, in the absence of any CFR N.E./S.E. Asia deals and discussions, the FOB numbers can be used as a gauge of where trading activity might take place at the discretion of the editor.

The Asia report focuses on the regional spot market for polymer grade propylene and carries domestic contract pricing information from Taiwan in the text.

CFR and FOB Northeast Asia (NE Asia) comprises China, Japan, Korea, and Taiwan. CFR Southeast Asia (SE Asia) comprises the Philippines, Thailand, Malaysia, Singapore and Indonesia. The CFR China covers imports into China main ports and takes into consideration deals done into northern, eastern and southern provinces.

In the US, chemical and polymer grade propylene are sold on a stream basis and contract prices represent benchmark price levels. Chemical and polymer grade contract price quotes are subject to discounts, depending on volume.

For US domestic transactions, prices are on a pipeline basis. Spot US export activity information may be included in the text. The US report includes NPRA survey data.

All regional reports offer market commentary that includes details of traced transactions, news on the supply/demand balance, export/import information, contract price negotiations and general sentiment for price direction. Where applicable there is product information, comments on up and downstream market developments and general market intelligence. 

 

2 October 2012