Exports, cuts in cracker runs help offset bearish pressure on propylene in Europe

17-Oct-11
A combination of exports and reduction in cracker operating rates over the past four months has helped to offset some of the bearish pressure on propylene in Europe, as per ICIS. Propylene markets were bearish in Europe on poor demand from derivative polypropylene (PP) and varied production problems, as per ICIS. About 100,000 tons of propylene has been booked for export since July, primarily to the US Gulf and Americas, largely rebalancing players’ systems. Exports to the East have evoked little interest because of weak demand and ever decreasing prices in Asia. Shipowners are not keen to offer competitive freight rates to Asia, as there is no cargo to carry back on the return trip, as well as due to very high rates. But despite steps taken by the European players to insure themselves against a demand slowdown, the market remains balanced-to-long. The propylene market could lengthen further as a result of waning export potential and little sign of improvement in terms of demand. US propylene contract prices for October settled down a significant 14 cents/lb (US$309/ton) from September, followed by spot prices. This, together with the sizeable volume already imported, will limit export options. Sources said the ability to move volumes from the European system has been the market’s saving grace, but now it would be more difficult to manage volumes. Weaker US propylene results in cheaper and more competitively priced propylene derivatives – and this could also be expected to add to European demand fears. It is difficult to conclude business with China as the raised requirements for LCs (letters of credi) has brought buying to a complete standstill. Price drops in the US would mean keen competition for whatever limited business there was still to be had. Sources agreed that the prospect of more drastic cutbacks at crackers is looming in November, given what seemed to be a worsening environment for ethylene and polyethylene (PE).
  More News  Post Your Comment
{{comment.Name}} made a post.
{{comment.DateTimeStampDisplay}}

{{comment.Comments}}

COMMENTS

0

There are no comments to display. Be the first one to comment!

*

Name Required.

*

Email Id Required.

Email Id Not Valid.

*

Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.
*

Message Required.

Click to Change image  Refresh Captcha