In Asia, spot propylene prices recorded significant increases over the last week, gaining US$60/ton on FOB Korea basis, as per Chemorbis. Meanwhile, the increase amount reaches three digits when compared to the beginning of the month- at US$125/ton. Planned turnarounds as well as unplanned shutdowns are pointed to as the main driver behind these noteworthy rise to a 29 month high- the highest level since September 2008.
Yeochun NCC’s 485,000 tpa steam cracker was shut due to a power failure early last week. The company had originally planned to restart the cracker on the 24th of February but they had to delay the date due to furnace damage. According to market players, the company is planning to restart the cracker partly over the weekend but the operating rates will remain low at around 60% capacity.Meanwhile, CPC is planning to shut down No. 4 line with 193,000 tpa propylene capacity in Taiwan due to some mechanical issues. As of the 21st of February, the company has been running the cracker at 90% capacity. Guangzhou Petrochemical’s 220,000 tpa cracker was shut on February 14th for 30-40 days. Formosa had halted their operations at the 270,000 tpa Taiwan propylene plant in January for a month long maintenance at the metathesis unit. LG Chem will conduct maintenance on March 17th at the 390,000 tpa propylene plant. The company expects to lose 32,500 tons of propylene during the shutdown but they plan to raise their capacity to 450,000 tpa during their maintenance. Idemitsu Kosan’s 224,000 tpa propylene plant in Chiba, Japan will be shut for maintenance between March 27th and May 18th. Formosa’s 375,000 tpa propylene plant in Taiwan will also be shut between March 13th and April 27th for turnaround reason.
PP markets in Asia have already responded to these firm upstream developments while the recent gains in oil costs, triggered by the political unrest in oil producing countries pushed prices above the US$95/bbl threshold, also affect the already bullish sentiment. Overseas producers started to announce the March PP offers to China with increases. A Middle Eastern producer elected to issue US$90/ton increases on PP raffia and injection prices and lifted PP block copolymer prices by US$70/ton over February prices. This producer spared lower than usual quotas to China since they could achieve better margins in other global markets. Meanwhile, a South Korean producer issued US$50-70/ton increases on PP block copolymer prices for March, pointing to their limited supplies and higher production costs. The seller reported conceding to only US$10/ton discounts on done deals. A different South Korean producer’s March sell idea for PP block copolymer stands US$90/ton above February done deal level.