Asian spot propylene prices have risen by US$45/ton when compared to the beginning of April. As per Chemorbis, current spot propylene prices stand at around US$1290/ton FOB Korea. Dwindling supply levels and maintenance shutdowns at 21 plants in Asia over the next few months are expected to give support to propylene costs over the near term.
Nippon Oil’s 140,000 tpa propylene plant in Japan will be shut in April-May for 32 days. The company’s 260,000 tpa plant came in need of an unexpected 19 day maintenance shutdown on April 21st. It’s 60,000 tpa propylene plants in Japan will be shut during May and June for maintenance work at the FCC units for 30 and 39 days for each plant. Formosa’s 250,000 tpa plant in Taiwan will not be operating for 40 days during April-May. BASF-YPC’s 300,000 tpa propylene plant in China will be shut until mid June for expansion of capacity by 70,000 tpa. Mitsubishi is planning to shut its propylene plants in Japan with 170,000 tpa, 260,000 tpa and 150,000 tpa capacity during May and July. The shutdowns are expected to last 6 weeks, 2 months and 1 month, respectively. Nippon Oil’s 100,000 tpa propylene plant in Japan will be shut for a month in June-July for its FCCC unit maintenance. S. Oil’s 200,000 tpa plant in South Korea will be down for 40 days during the same period while SK Energy’s 250,000-350,000 tpa plant in South Korea will be shut for one and a half month. Mitsui’s propylene plants with 280,000 tpa and 140,000 tpa propylene capacity in Japan will also be shut during June-July and June-August, respectively.
The region had previously been suffering from extended supply problems in Japan due to production problems which occurred in Mitsui and Mitsubishi’s plants. This situation plus stronger demand coming from Latin America had already given a push to the increases in propylene costs earlier in April. As a result of higher propylene costs, which led to squeezed margins on the sellers’ side, Asian producers have started to announce higher May PP offers to Southeast Asia and China. This is despite the recently slower demand which was reacting to the recent increases and on the back of the Labor Day holiday.
At the beginning of last week, Asian producers announced May offers that are US$20-80/ton higher to Southeast Asian market. These increases were not a surprise as spot PP prices during the previous week were not sufficient to cover producers’ theoretical production costs when considering higher spot propylene prices. May PP offers from South Korea to China saw remarkable increases- May PP raffia and injection offers were raised by US$70-90/ton over April offers by one, and by US$40-50/ton increases by the other vs recent April done deal level.