Polypropylene markets in Asia under duress from rising propylene values

From levels of US$960/MT FOB Korea in H1-October, H2-December propylene prices have spiked past US$1100/MT in Asia. The key factor behind these robust gains has been restricted supplies in the region as producers in South Korea, Taiwan and Japan continue to face maintenance shutdowns and production issues. Also, healthy demand from downstream propylene oxide, acrylonitrile and acrylic acid markets continue to bolster propylene prices. This scenario is having an adverse effect on polypropylene markets, where demand is relatively unenthusiastic. PP continues to trade with sizeable negative margins on inability of producers to recover production costs due to lackluster outlook. With the advent of deep sea cargoes from Europe and America, prices are expected to steady or even ease by H1-January. If prices fail to ease, the region could end up with reduced volumes on PP on cuts in operating rates by producers.
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