Spot olefin prices in Asia eroded over the week amidst weaker downstream polymer markets including PP and PE in the region, as per ChemOrbis. Ethylene and propylene prices recorded a fall as lower polymer prices hindered monomer demand. Plus, olefin prices failed to gain any support from the upstream chain as crude oil and naphtha prices now stand below the levels of early November.
On the Nymex, crude oil futures for December deliveries inched up less than US$1/barrel week over week while they stood slightly below the figures at the beginning of this month. Crude oil contracts plunged by over five dollars/barrel from a month ago when prices had hovered above US$90/barrel. Despite the hike, spot naphtha costs indicated a drop of more than US$10/ton since the start of November.
In addition to the softer path in upstream markets, weakening sentiment in China’s downstream markets softened the outlook for monomer costs. Earlier in November, sellers were encouraged to lift their prices as Iran’s export ban on polymers had firmed the sentiment in China’s PP and PE markets before sentiment turned down following the partial cancellation of the ban. Domestic producers ended last week with price cuts.In the propylene market, spot offers moved down by $20/ton on FOB South Korea basis week over week after recording steady gains in the first half of the month with the latest figures now representing a US$15/ton fall from November 1, as per ChemOrbis. Market sources in Asia pointed to the gap between traders’ sell ideas and buyers’ buy ideas as a reason behind the hampered trading activities. In the ethylene market, where prices have been gradually moving down since the beginning of the month, added to their losses last week owing to subdued downstream PE activities. Plus, comfortable availability weighed down on the sentiment. Market sources in the region commented that some Iranian ethylene cargoes were to arrive to China during the second half of November which would increase supplies. Spot ethylene costs decreased by around US$40/ton on CFR Northeast Asia basis on the week, bringing the cumulative drop to nearly US$110/ton since this month started.
News that Shell Singapore plans to expand the existing capacity of its Pulau Bukom cracker may exert some downwards pressure on Asian propylene and ethylene prices in the upcoming days. The company may increase its production at the cracker by over 20%, market sources in the region report, although the exact date of the debottlenecking is yet to be revealed. The cracker reportedly produces 800,000 tpa ethylene and 450,000 tpa propylene, while the company will add 160,000 tpa of ethylene and 90,000 tpa of propylene to these figures via the debottlenecking.