Reduced run rates push propylene prices higher in Asia

30-Jul-10
Spot propylene prices in Asia have risen considerably this week, with prices finding support from reduced operating rates at several propylene facilities in the region along with firmer equity markets and better downstream buying interest, as per Chemorbis. Spot propylene prices on FOB Korea basis have risen by US$45/ton when compared with the end of last week and US$70/ton since last Thursday, with the bulk of these increases coming in the past two days. Another key factor affecting prices has been reduced operating rates at several Asian propylene producers. Following two consecutive fires at its petrochemical complex in Mailiao, Formosa has experienced reduced propylene output at a cracker, an olefins conversion unit and at its RFCC units. FPG’s production problems could worsen for August on rumors that it’s application to delay the scheduled turnaround at its No. 2 steam cracker in Mailiao from August to October may be rejected by the Taiwanese government in light of the persistent safety problems plaguing the company. In addition to Formosa’s ongoing production issues, South Korea’s Samsung Total will reportedly lose nearly 10,000 tons of propylene as a result of the recent outage at the 240,000 tpa Daesan facility that was shut down this month following an electrical outage caused by a thunderstorm. Though the cracker resumed production after an outage of only three days, it has lost approximately four days’ worth of propylene production while bringing the various units back to full capacity. Samsung is said to be considering cutting run rates at some of its PP facilities to match the propylene losses. Asian propylene prices have also gained strength from rising equity markets in Asia, which have also kept alive a sagging rally in the crude oil market. Crude oil futures on the NYMEX traded above the US$77/barrel threshold once again on Thursday as the positive effect of higher equity values outweighed the bearish effect of higher crude oil inventories in the US. Stronger upstream markets also prompted a rally in Asia’s spot PP market, where prices have gained ground this week as traders and distributors have increased their purchases after several weeks of slow trading.
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