C3 peaks to two month high in Asia on tight supplies

06-Aug-10
This week has seen propylene (C3) spot prices in Asia touching two-month highs as supply tightness persists. Supply is squeezed in the region due to disruption caused by outages in July at Formosa Petrochemical Corp’s facilities in Mailiao. Taiwan is a net exporter of propylene, with the bulk of exports coming from Formosa which supplies the feedstock to its derivative 450,000 tpa polypropylene (PP) plant and a 160,000 tpa crude acrylic acid (CAA) unit in Ningbo, China. As per ICIS, buying ideas have spiked by US$70-90/ton this week to US$1150-1170/ton CFR northeast (NE) Asia. However, end-users in China talk of limited offers as traders prefer to withdraw amid shrinking supply partly due to the outages, and also because some sellers are deliberating efforts on targeting sales to Formosa. Formosa is rumoured to have purchased a regional cargo of C3 at US$1170-1180/ton CFR NE Asia this week for H2 August arrival. This has spiked sell offers being discussed past US$1200/MT CFR NE Asia. Formosa’s No.1, 700,000 tpa naphtha cracker, shut since a blast, is expected to resume operations only in late September/early October. An explosion at its 73,000 bpd desulphurising plant has forced Formosa to shut its 540,000 bpd refinery and several downstream facilities. At Mailiao, the company operates an olefin conversion unit (OCU), with capacity to produce 250,000 tpa propylene, two residual fluidised catalytic crackers (RFCC) with a combined propylene nameplate capacity of 650,000 tpa. Operations have not resumed at the derivative propylene units. Market sentiments continue to be optimistic amid expectations of further spot purchases by Formosa, expectations of elevation in derivative demand during the peak manufacturing season in Q3 as factories gear up to meet Christmas orders for end-products and the spike in crude oil prices. PP spot prices were on the rise this week, partly buoyed by concerns over the propylene feedstock shortage.
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Large capacity chemical storage tanks

Large capacity chemical storage tanks