Asia C3 rebounds on improved sentiment, China PP market gains

Source: ICIS News

2018/12/10

SINGAPORE (ICIS)--Spot propylene prices in northeast Asia rebounded, snapping the sharp downtrend from early November, on the back of improved sentiment and gains in downstream polypropylene (PP) market in China.

Port workers looking at a cargo ship at the port of Qingdao in China (Source: Sipa Asia/REX/Shutterstock)

 - Talks centred on December arrivals

 - Spot talks for January arrivals hit by prolonged contract talks

 - East China market may see inventory pressure

In the week ended 7 December, propylene prices climbed 7.6% from the previous week to $920/tonne CFR (cost and freight) NE (northeast) Asia, according to ICIS data.

ICIS Editorial Chart goes here

While the uptrend came as a welcome respite for many producers, the current uptrend may not be sustainable, according to some sources.

Downstream PP sellers were facing more difficulties offloading cargoes during the course of last week, and there were also talks of a build-up in propylene inventory in China’s domestic market as PP prices were trending up.

On 7 December, domestic PP yarn prices in east China stood at yuan (CNY) 9,525/tonne ex-warehouse, up by 6.1% from end-November, according to ICIS data.

Some players in the propylene market were also wary of any implications from OPEC’s decision to cut crude production starting next year.

Crude price movement affects sentiment in downstream petrochemical markets.

At midday, crude prices were mixed, with Brent crude up 38 cents/bbl at $62.05/bbl, while US crude was down 6 cents at $51.55/bbl.

On the propylene supply front, spot cargoes for January arrival may be limited as sellers could not commit to volumes amid grueling and long-drawn term contract negotiations, which started in the first half of November.

Sellers would not be in a hurry to make offers for the next one to two weeks and buyers may have to the relinquish control of the market, something that they have been holding for the past few weeks.

Focus article by Joson Ng

Additional reporting by Doris He

($1 = CNY6.89)