NE Asia propylene continues subdued trend; but may start to turn the corner

Source: ICIS News

2019/02/18

SINGAPORE (ICIS)--Spot propylene market in northeast Asia may continue its sluggish start to the Lunar New Year in the coming week but sellers are hopeful for a change in fortune in the final week of February or in early March.

The Lunar New Year started on 5 February and several Asian countries marked the day with one or two day public holiday with China, the biggest market in Asia, was shut on 4-10 February.

 - Buyers of PP could return in second half of week starting 18 February

 - Demand of propylene could improve slowly

 - Propylene market could be supported from March onwards

Spot propylene prices were at $917.5/tonne CFR (cost and freight) NE (northeast Asia) on average on the week that ended 15 February, down by $10/tonne from the week before.

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In China, many polypropylene (PP) producers have been suffering from weak sales and high PP inventory following the long holidays as certain downstream units remained shut.

As a result, many PP producers put off buying propylene as they were not willing to risk keeping propylene in stock.

Buyers of PP could return in the second half of the week starting 18 February after the 15th day in the Lunar calendar and PP producers may re-enter the propylene spot market after, assuming PP sales are good in the second half of the week.

While some market participants think the market is set to turn the corner, the PP market could still suffer from a cold start as it could take a few days for inventories to go down, and confidence to return.

In the coming weeks, there are signs that more bullish factors may take shape.

In China, Ningbo Haiyue’s propane dehydrogenation (PDH) unit is said to be heading for a scheduled maintenance in March.

That could help support prices in the domestic market in China as the unit does not have any integrated downstream units.

Beyond that, there could also be slight tightening of supply in northeast Asia with some turnarounds set to begin in March as shown in the list below.

Company Location Facility type Propylene capacity (tonnes/yr) Duration
Hanwha Total Petrochemical Daesan, south Korea OCU 220,000 26 March to 8 May
JXTG Nippon Oil & Energy Chiba, Japan FCC 50,000 Planned maintenance work from mid-March to mid-April.
Formosa Petrochemical Corp (FPCC) Mailiao, Taiwan RFCC 1 350,000 1 March to 10 April
Hyosung Ulsan, south Korea PDH 300,000 15 February to 13 March

Additional reporting by Doris He

Focus article by Joson Ng