Major regions of the world have seen a volatile trend in ethylene prices while spot propylene prices have climbed well above ethylene. As per Chemorbis, persistent supply tightness is cited as the main reason driving propylene prices higher particularly in Europe and the US, where spot values have come quite close to their previous record high levels. Players note that the last time propylene prices were so high, crude oil was hovering at US$150 per barrel. Currently, oil is lingering around US$80 for the past many weeks. Also supply tightness is stemming from production issues and not from rising demand- thus fundamentals are not supporting the market.
When looking at the Asian market, the trend for spot propylene has been relatively weaker for the last 2-3 weeks. Until mid-March, 13 scheduled shutdowns along with unplanned outages in Asia pushed spot offers and done deals to US$1310/ton CFR China and US$1280/ton FOB Korea. These have dropped by US$20-30/ton due to reduction in run rates at PP plants along with additional capacity from two new crackers that have started up in Singapore and Thailand with a total 1.25 mln tpa propylene capacity. Despite the easing, spot propylene values in Asia are above ethylene. Supply from the newly commissioned crackers in Southeast Asia and falling downstream markets have also weighed down ethylene prices to US$1150/ton CFR NEA and US$1140/ton FOB Korea. Thus, propylene is carrying a premium of over US$100/ton over ethylene in Asia.
In Europe, spot propylene prices are rising at full throttle, reported at a three and a half year high at €1010-1020/ton FD NEW, rising by €260/ton since the beginning of 2010, on tight supplies and strong demand in derivatives markets other than PP. On the other hand, spot ethylene values are reported at €820-830/ton FD NWE, falling by €25-30/ton within the month. April propylene contracts settled €70/ton higher at €980/ton FD NWE last week. This settlement was marked as the first time the propylene contract stands above the ethylene contract at €960/ton with a €20/ton increase.
In USA, recent deals were concluded at US$1741/ton DLVD USG for spot polymer grade propylene. Indicating an increase of $640/ton with respect to early 2010, this is the highest level seen since July 2008. Ethylene spot values have been fluctuating for some time, standing at US$1345-1355/ton currently. This shows that the gap between propylene and ethylene is the widest in the US by US$385-395/ton.