NE Asia C3 import talks take a back seat amid China re-stocking

Author: Jude Chan

2020/09/18

SINGAPORE (ICIS)--Import deals and discussions slowed to a crawl in the northeast Asian propylene (C3) market, as buyers in China turned to the domestic market for prompt cargoes to replenish their inventories before the country’s week-long holiday at the start of October.

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The brisk domestic trading activity, coupled with a rise in China’s polypropylene (PP) futures, saw strong gains in domestic propylene prices. By 17 September, Shandong domestic prices had climbed close to 5% from a week ago.

Buoyed by the upbeat sentiment in China as well as tight supply of spot propylene cargo in the region, indicative prices in the import market continued to trend upwards.

Selling indications were mostly at the $900-920/tonne CFR (cost and freight) NE (northeast) Asia levels in the week, as much as $40/tonne above the high end of the assessed price on 11 September.

The sharp increase sent buyers retreating to the sidelines.

However, most buyers - mindful that spot import cargo could remain tight in the near-term - also raised their buying indications.

Buying indications were mostly at around $880-900/tonne CFR NE Asia, as much as $20/tonne above the high end of the assessed price on 11 September.

In Korea, supply remains tight as major producer Lotte Chemical continues to absorb most domestic supply. The tight supply situation is expected to extend into mid-November, when Lotte is scheduled to restart its Daesan cracker.

However, some easing is expected in October, when another major Korean producer, S-Oil Corp, is expected to restart its No 2 fluid catalytic cracking (FCC) unit in Ulsan.

In Japan, supply was also seen to be tight, as producer Eneos Corporation’s FCC in Chiba remains shut after facing an unexpected “mechanical issue”, according to sources familiar with the matter.

At the same time,  Japanese producer Idemitsu Kosan has shut its cracker in Tokuyama for a turnaround, which is expected to finish at the end of October.

Meanwhile, Taiwan was slightly shorter in the week, as major domestic supplier CPC Corp lowered cargo volumes to some contract buyers. However, market players said the impact was seen to be minimal.

Supply also remained tight in southeast Asia, amid a turnaround at Exxon Mobil’s No 2 cracker in Singapore.

Thailand’s PTT Global Chemical, which is scheduled to start up its propylene oxide (PO) unit by October, also cancelled a propylene sales tender in the week.

Focus article by Jude Chan

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