Propylene demand weakens in Asia on uncertain demand

26-Dec-08
Chinese buyers who have sufficient stockpiles for the month are refraining from further deal conclusion on the expectation that prices would fall. If deteriorating crude oil prices plummet naphtha prices with them, producers could increase run rates at steam crackers, augmenting propylene production and leading to a price dip. Processors are also expected to reduce run rates during the 2 Chinese Lunar holiday. Demand for propylene derivatives : acrylonitrile, acrylic acid, phenol and propylene oxide has not started recovering. Though downstream PP demand picked up last month, the speed has started slowing this month. Hence, buyers are refraining from concluding deals as the impending 2 week long Lunar New Year holidays in China draws closer. Weakening of propylene demand seems inevitable on the verge of the week long national holidays and also as crude oil continues to weaken. The two week long holiday commences on January 26, while China`s financial markets and general trading operations will close from January 25-31.
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