PP prices in Turkey, Egypt defy volatile oil market

01-Sep-10

This week, spot propylene prices in Asia have firmed up by nearly US$30/ton on FOB Korea basis, with the total increase amount reaching almost US$100/ton since the beginning of the start, as per Chemorbis. Prices are moving up despite sliding crude oil prices because of tight availability, triggered by unexpected shutdowns at several producers’ plants. On NYMEX, crude oil prices dipped from the early month level of US$81.3/barrel to as low as US$71.9/barrel on August 31. As the upward movement in spot propylene prices continues to push PP production costs higher, the global PP markets continue to defy the losses in the energy markets, with regular suppliers revealing their September PP offers with increases to Turkey and Egypt, supported by the increases they have made in the Chinese market for September cargoes. In Egypt, where the PP market witnessed monthly decreases of US$50-70/ton on initial August prices from the Middle East, regional suppliers have started to return to the market with higher September offers. A couple of Middle Eastern producers lifted their import PP prices by US$40/ton and US$70/ton compared to their August levels. Egypt’s PP market was under upward pressure when considering the theoretical calculations based on the Middle Eastern offers given to China, where these origins were initially offered with three-digit hikes for September. The domestic producer, OPC, also announced a price hike of EGP400/ton (approx. US$72/ton) on their August offers, in line with the higher import level. In Turkey’s import PP market, buyers are receiving initial September import offers from the Middle East with increases of over US$100/ton in comparison with the early August levels. Some of this increase took place over the month of August as propylene prices continuously increased in Asia raising expectations of rising PP prices. Nonetheless, no done deals were reported at current levels for now as converters in Turkey have currently moved to the sidelines to let the Ramadan holiday pass before engaging in new purchases.