Propylene prices moving higher around the world

Propylene prices moved higher over the past week in Asia, Europe and USA, as per Chemorbis. Prices were buoyed by tight supplies in Europe and the US, while Asian prices moved higher as Asian sellers began to look into the possibility of concluding export deals with buyers in America and Europe. In the US, players await the settlement of the January propylene contract, with most players expecting to see massive increases of around US$330-440/ton on the new contract level. Buyers are not surprised by the longer than usual negotiation time for the January contract as the discussed increases are expected to create significant difficulties for downstream PP producers due to unwillingness of their buyers to accept price increases sufficient enough to cover the projected increase in their raw material costs. Players pointed to persistently tight supplies along with normal demand as the main reasons for their expectations of large increases on the January contract level, adding that the region’s supply woes were amplified this week due to recent force majeure declarations from two propylene producers inside the country. Notional spot prices for polymer grade propylene moved up US$135/ton on the week to reflect widespread expectations of a higher settlement for the monthly contract. In Europe, notional spot prices also moved higher this week after the January propylene contract was settled with a significant increase of €110/ton from December shortly before the recent holidays. Spot quotes for polymer grade propylene increased €35/ton on the week to bring the prevailing spot quotes closer to the new contract settlement, with spot propylene prices currently standing at their highest levels since April of last year. Higher energy prices along with limited propylene availability inside Europe were cited as some of the major factors pushing prices higher, while demand is also said to be comparatively healthy for now. Tight supply in Europe and the US also buoyed spot propylene prices in Asia as sellers report that they have begun examining the feasibility of export business from Asia to the US, with players adding that some deals for ex-Asia cargoes have already been finalized with US buyers. Demand for Asian material from American buyers helped to push spot propylene prices on an FOB Korea basis up by around US$60/ton this week while spot prices on a CFR China basis posted smaller increases of around US$15/ton as buyers inside China were hesitant to purchase in large amounts ahead of the upcoming Chinese New Year holidays.