NE Asian propylene import talks hold steady amid plant issues

Author: Jude Chan

2020/11/20

SINGAPORE (ICIS)--Propylene supply in Asia is expected to tighten further as major Japanese producer ENEOS Corp plans to shut its cracker in Kawasaki for up to six weeks from early December to resolve a technical glitch.

A source close to the company said the facility, which has a propylene production capacity of 308,000 tonnes/year, will run at reduced rates leading up to the shutdown.

Amid the tight spot supply, selling indications were mostly around $910-950/tonne CFR NE Asia in the week – as much as $20/tonne higher than the high end of the assessed range on 13 November.

Discussions remained firm in the northeast Asian propylene import market, as buying interest ramped up for December arrival shipments.

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Demand for import cargoes was driven by the South Korean market, as players sought to cover a shortage in propylene supply following producer LG Chem’s unplanned cracker outage earlier this month.

The cracker in Yeosu, which has a propylene production capacity of 580,000 tonnes/year, is expected to only restart around January 2021.

At the same time, ENEOS’s No 1 fluid catalytic cracking (FCC) unit in Negishi will see a delay in its scheduled start-up following a turnaround, according to a source familiar with the matter. The unit was earlier expected to restart around mid-November.

In China, buyers started to warm up to spot talks for December arrival cargoes amid strong gains in the China polypropylene (PP) futures market.

Buyers also found greater incentive for import discussions, as the US dollar continued to weaken against the Chinese yuan.

Buying indications remained within the assessed range on 13 November, at around $870-920/tonne CFR NE Asia.

Meanwhile, in southeast Asia, some propylene sales tenders were floated in the week, even as demand was seen to be largely stable.

Philippines' Petron Corp issued a sales tender for three 1,600-2,400 tonne parcels to scheduled to load from Bataan in H2 December, while Thailand's PTT Global Chemical (PTTGC) has floated one 1,600-2,350 tonne lot for loading in late November from Map Ta Phut.

Elsewhere, Saudi Arabia’s Petro Rabigh has issued a sales tender for a 6,500 tonne parcel to load in mid-December from Rabigh. Bids are due around 24 November, industry sources said.

Focus article by Jude Chan