SINGAPORE (ICIS)--Propylene spot prices in northeast Asia surged to $1,000/tonne – their highest level so far this year – on the back of strong performance from derivative markets, and may remain supported at current levels this week.
Buyers that decided to sit out last week’s price surge will be forced back into the market for their October requirements, market participants said.
On 8 September, propylene prices spiked 7.5% week on week to an average of $1,000/tonne CFR (cost and freight) NE (northeast) Asia, beating the high recorded in mid-February, according to ICIS data.
Acrylic acid, another main downstream sector for propylene, has also been on a price uptrend on expectations of tightening supply in Asia, as more volumes could move to the US, which had massive disruptions to petrochemical operations after Hurricane Harvey.
Asia’s propylene prices were also tracking strong domestic market gains in China, which is a major importer of the material in the region.
Chinese producers led by petrochemical major Sinopec hiked their domestic list prices for propylene last week.
The magnitude of the price increase in the import market last week took some buyers by surprise and opted to stay out of the market, calling the gains “crazy”, while others deemed it was long overdue citing the strength of domestic prices.
In Shandong province in east China, domestic propylene prices have surged by 21.5% from early June on a confluence of reasons, including the strong PP futures market and amid the Chinese government’s ongoing environmental inspections of chemical factories.
Meanwhile, the continued appreciation of the Chinese yuan against the US dollar was also a contributing factor for rising import prices, since a strong currency makes imports cheaper, some market players said.
Additional reporting by Doris He
Picture (top): Kurt Amthor/imageBROKER/REX/Shutterstock
($1 = CNY6.49)
Focus article by Joson Ng