Asia propylene returns to premium over ethylene

01-Nov-12
After being in negative territory for most of H2-October, Asian propylene flipped back to a premium over ethylene Tuesday, as per Platts data. Propylene prices edged up against ethylene on Tuesday to be assessed at US$1357/mt CFR China, while ethylene was assessed at US$1355/mt CFR Northeast Asia. Propylene prices were firmer this week as Taiwan's state-owned CPC failed to start up as planned the new 80,000 bpd residue fluid catalytic cracker at its Talin refinery in Kaohsiung. The company fed feedstock into the unit last Thursday but encountered technical problems. Asian propylene has been at a premium to ethylene since February 25, 2010, but flipped into negative territory on October 15 and bottomed at minus US$40/mt on October 18. There was a glut in propylene supply after Japan's Nippon Shokubai shut its 460,000 tpa acrylic acid plant -- which uses propylene as feedstock -- on September 29, following an explosion. A naphtha-fed steam cracker typically produces two units of ethylene for every unit of propylene. And while Japanese olefins producers did not immediately cut operating rates, sources said they would reduce rates in November to 80-85% due to the propylene surplus, creating a tightness in the ethylene market. Market participants, however, reacted more promptly to the Nippon Shokubai accident, with Asian propylene prices falling US$50/mt to US$1335/mt CFR China over October 1-5 despite the China market being closed for a week, Platts data showed. Nippon Shokubai typically buys around 350,000 mt/year of propylene to produce acrylic acid, a market source said. This translates into another 20 spot cargoes of 1,500 mt each coming into the market each month, according to Platts calculations. Meanwhile, market sources said the propylene market is expected to be long going into 2013 with Nippon Shokubai not indicating any restart date. Market participants expected the plant to be shut for at least six months. Ethylene market sentiment was mixed amid supply tightness and high offers, as downstream demand remained weak. End-users are also unable to pass on current ethylene feedstock costs. Demand for spot ethylene in the downstream polyethylene market is virtually absent as PE spot prices are currently lower than ethylene feedstock costs, making it more cost-effective for PE producers to buy PE in the spot market than to produce it from spot ethylene cargoes.
  More News  Post Your Comment

Previous News

Next News

{{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
Complete Herbert Olbrich cushion vinyl flooring line

Complete Herbert Olbrich cushion vinyl flooring line