Propylene prices in Asia plunged to three year lows at US$850/MT CFR FE. At this point, traders seem to want to liquidate stocks before yet another price dip.
In a bid to cope with this scenario, several producers in Asia have planned production cuts. These include South Korea's LG Chemical Ltd., Samsung Total and Korea Petrochemical Industrial Co., Ltd. (KPIC). However, it seems that bogged down by negative sentiments in downstream markets, particularly butadiene, even a supply cut will not help. This is evident in the fact that though Formosa's 1.03 mln tpa No.2 cracker has brought down for turnaround last week, reduced supplies have failed to arrest price declines in the butadiene market. Downstream PP prices have also dropped below US$1200/MT, and seem to be on headed further south. The banking crisis will be replaced by recessionary concerns. Uncertainty prevails whether demand could support prices as the global economy seems on the verge of recession. Market stability is predicted to be hazy in the near future and may keep trade in petrochemicals at a minimum.
17-Oct-08 
