Rising supplies depress monomer prices in Asia, Europe

Spot ethylene and propylene prices have lost some ground over the past week in Asia and Europe, due to rising supply levels in both regions, as per Chemorbis. Rising supply in the Middle East has also helped ease the availability of import supplies. Demand from both Europe and Asia remained limited over the past week. Demand in Europe has risen post-summer holidays, but lesser than expected. European cracker operators have been operating facilities at high rates as buyers have been eagerly acquiring cargoes in the spot market to cover their positions. However, last week, buyers started to scale back their spot purchases, having covered their immediate needs, and are planning to reassess the demand outlook for their end products before making any additional spot purchases. Spot ethylene quotes declined €55-60/ton in Europe last week as offers were down-adjusted to match the reduced demand for spot cargoes. In the propylene market, higher cracker run rates have driven supply levels higher without any matching increase in spot propylene demand. Some PP outages in the region also contributed to higher propylene supply levels by freeing up additional cargoes of propylene feedstock. Spot propylene prices were quoted €25/ton below last week’s level in accordance with lower done deal prices in the spot market. Lower than expected done deal prices also weighed down spot propylene prices in Asia, with spot prices declining US$25/ton over the past week as major Asian sellers found themselves unable to conclude deals with Chinese buyers at their targeted price levels. Rising supply levels were also cited as a factor pushing spot prices lower. Thailand’s PTT Chemical announced plans to raise the operating rates of its three crackers in Thailand from 70% to 100% in the fourth quarter due to better feedstock availability, while PetroRabigh also announced plans to raise the operating rates of its fluid catalytic cracker in Saudi Arabia from 80% to 100% this week. Japan’s Mitsui Chemicals also announced plans to restart its 330,000 tpa propylene capacity cracker in Chiba later this week. Weaker spot ethylene buying appetite in Europe has led Middle Eastern ethylene suppliers to redirect their cargoes to Southeast Asia, where spot ethylene quotes fell US$40/ton this week in response to a slate of reported import deals for Middle Eastern cargoes. Buyers in Northeast Asia also took notice of the upcoming import influx into Southeast Asia, with a number of sources speculating that these cargoes will eventually find their way to Northeast Asia, with these sources adding that exports from Southeast Asian crackers also loom as a possibility now that rising import volumes and higher operating rates on the part of regional crackers point to a further easing of supply conditions in the region.
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