Globally, spot propylene costs continued to lose noticeable ground as energy and naphtha markets maintained their bearish trend during the course of the past week, as per ChemOrbis. Consecutive decreases in upstream costs combined with poor downstream demand led to expectations of further falls, while causing an increasing number of buyers to step out from the market. Nymex crude futures contracts for June delivery dropped by over US$11/barrel since May, with declines of US$1.81/barrel during the past week. Similarly, ICE June Brent crude prices fell by over US$8/barrel since the start of this month, and by a dollar during last week. Facing downwards pressure from the persistently bearish energy complex, spot naphtha markets inevitably posted additional drops over the week. In Asia, spot values plummeted by US$40/ton on a CFR Japan basis week over week, while prices lost another US$15/ton in Europe on CIF NWE basis. When compared to the end of April, the most recent figures represented a decrease of US$90/ton in both regions. In Europe, despite some production cutbacks, spot propylene prices plunged €120/ton on FD NWE basis during last week in tandem with relentless drops in naphtha feedstock costs and muted buying interest from the downstream PP market. According to market sources, naphtha supply loosened as the industry focused on lower cost feedstock, propane, and due to restarting refineries. Since spot propylene prices have fallen by €130/ton since early May, June monomer contracts in the region are expected to settle lower than May levels.
In Asia, spot propylene offers decreased by US$110/ton on FOB South Korea basis compared to the previous week, while the cumulative drop with respect to early May reached US$150/ton, as per ChemOrbis. Seeing steep losses in the last few weeks, most buyers preferred to follow a “wait and see” policy in a bid to see a clearer market scene for the coming weeks. In the US, spot polymer grade propylene prices recorded a sharp decrease of 9 cents/lb (US$198/ton) on DLVD USG basis last week in the midst of a lack of healthy demand and retreating upstream costs. The recent levels represent a massive fall of 15.75 cents /lb (US$347/ton) with respect to the end of April. In contrast to initial flat nominations for June, other contract announcements for polymer grade propylene emerged with drops between 3 cents/lb (US$66/ton) to 10 cents/lb (US$220/ton).