SINGAPORE (ICIS)--Domestic spot prices of propylene oxide (PO) in China may inch up on unexpected plant outages.
- Supply expected to lengthen in the short term
- Downstream polyols demand to stay sluggish
- Average prices edged down by $10/tonne on 27 July
However, the increase in supply is expected to slacken in pace following the shutdown of a northeastern Chinese producer's – Jishen Chemical – line in early August.
A delay in the restart of an eastern China-based producer’s – Nanjing KUMHO GPRO Chemical’s (NKGC) – plant in the week of 6 August or later from late-July had further aggravated the situation.
Looking further forward, prices will likely be weighed by additional supply expected to reach Chinese shores from South Korean S-Oil’s 300,000 tonne/year PO start up as early as October this year, according to a market source.
The unit has commenced trial runs in July and is expected to achieve on-spec production sometime in August, the source said.
“Downstream polyols demand will likely remain sluggish for most of August,” a Chinese supplier said.
“But there may be some hope of a demand pick-up at the month-end with the approach of the seasonal peak,” he continued.
On 3 August, the average PO price in China slipped by yuan (CNY) 250/tonne ($37/tonne) from the previous week to CNY11,550/tonne DEL (delivered), according to ICIS data.
Domestic prices declined in early to mid-week before recovering some losses in end-week on news of an unexpected shutdown at one of Jishen Chemical’s lines.
Buying interest was re-ignited and re-stocking of cargoes started.
In the spot import market, average PO prices edged down by $10/tonne to $1,455/tonne CFR (cost & freight) China on 27 July, ICIS data showed.
($1 = CNY6.83)
(Inset: Foams are made from polyurethanes, which in turn is derived from propylene oxide)
Focus article by Matthew Chong