Northeast Asia propylene halts gains as supply normalises

SINGAPORE (ICIS)–Spot propylene prices in northeast Asia halted their gradual uptrend last week as supply has normalised and could loosen in the coming weeks.

In the week ended 14 July, prices were assessed at $875/tonne CFR (cost and freight) NE (northeast) Asia, down $2.5/tonne week on week, according to ICIS data.

Prices had largely been on an uptrend since 9 June, gaining a cumulative $47.5/tonne over a four-week period before slipping, the data showed.

Discussions have now shifted to August-arrival cargoes, supply of which is currently tight, according to sellers. But some players noted that this market condition would ease in the near term, citing two recent August propylene sale tenders.

Two sale tenders were floated last week – one, for a 9,000-tonne deep-sea cargo and the other, for a cargo of more than 3,000 tonnes from a South Korean producer, according to market sources

The deep-sea cargo tender closed last week but details were not immediately available, while the South Korean tender has yet to close.

Supply is also expected to increase due to higher operating rates at northeast Asian olefins conversion units (OCU), which produce propylene, amid weaker spot ethylene spot prices.

July also saw a number of propylene plants resuming operations after turnarounds.

In Japan, Asahi Kasei Mitsubishi Chemical Ethylene Corp has attained on-spec ethylene (C2) and propylene (C3) production at its Mizushima cracker in early July after completing a turnaround at the unit. The facility has propylene capacity of about 300,000 tonnes/year. The Mizushima cracker was brought off line for maintenance on 10 May.

JXTG Nippon Oil & Energy, meanwhile, plans to restart its fluid catalytic cracker (FCC) in Sendai on 23 July. The FCC, which can produce 100,000 tonne/year of propylene was taken off stream on 12 June for a regular maintenance.

In South Korea, SK Global Chemical restarted its number 1 fluid catalytic cracker (FCC) in Ulsan on 4 July from a shutdown on 29 May. The unit has a propylene capacity of 120,000 tonne/year.

In China, supply is also expected to return to normal when Ningbo Haiyue New Material’s propane dehydrogenation (PDH) unit in Zhejiang province restarts. The plant, which has a 600,000 tonnes/year propylene capacity, was shut on 20 June and is expected to resume production on 20 July, according to some market sources.

The plant’s propylene output is fully supplied to the east and south China markets as it has no downstream facilities. Its restart could dull China’s demand for propylene imports.

On the demand front, environmental checks at Chinese domestic manufacturing plants could weigh on the country’s propylene consumption in the near term, as operations of small and medium enterprises (SMEs) are likely to be hit, market sources said.

China’s Ministry of Environmental Protection demanded seven cities to implement corrective plans to address pollution, namely,  Zibo in Shandong; Hengshui in Hebei; Xingyang in Henan; Siping and Gongzhuling in Jilin; Jingdezhen in Jiangxi; and Changzhi in Shanxi.

Meanwhile, sales of polypropylene (PP) – the main downstream of propylene – have remained lacklustre in China, raising doubts over the sustainability of current import prices of the feedstock as Chinese buyers may turn to the domestic market for supply.

Focus article by Joson Ng

Additional reporting by Doris He

Pictured above: Qingdao port in east China (Source: Sipa Asia/REX/Shutterstock)