NE Asia C3 falls on bearish sentiment; supply to lengthen in Nov

SINGAPORE (ICIS)–Spot propylene prices in northeast Asia fell for the first time in five weeks, weighed down by expectations of long supply in November and weakness in China’s domestic market in Shandong.

Qingdao port in Shandong Province, China (Source: Sipa Asia/REX/Shutterstock)

– Supply lengthening in northeast Asia 

 – Buyers on wait-and-see mode

 – Near-term outlook bearish

In the week ended 19 October, prices were assessed at $1,170/tonne CFR (cost & freight) NE (northeast) Asia, falling from the peak hit so far this year, according to ICIS data.

“Buyers buy when prices are up, not when it’s dropping,” said a buyer in Mandarin.

Buyers kept to the sidelines as spot prices started easing.

Spot market trades will likely be impeded this week as industry players gather in China for the 13th International Olefin Annual Conference on 23-25 October in Wuhan, during which discussions are likely to focus on term contracts.

Market sentiment turned bearish as regional supply is expected to lengthen next month, partly due to completion of turnarounds at some production units in Thailand and Japan.

Some producers have been offloading cargoes to avoid an inventory build-up as they were their running olefin conversion units (OCU) at high rates amid better economics due to recent slump in ethylene prices.

In southeast Asia, there are expectations that supply will improve soon when a regional cracker restarts.

Supply from the Middle East is also available, as Saudi Arabia’s Petro Rabigh floated a sales tender for 9,000 tonnes of refrigerated propylene cargo for early November loading. The tender should conclude this week, market sources said.

Focus article by Joson Ng

Additional reporting by Doris He