Supply issues push monomer prices higher in USA, lower in Asia

Spot prices for ethylene and propylene gained ground in USA last week as a result of tightening supply levels; while Asian markets barely regarded the shutdown of Formosa’s cracker shutdown as the end of the cracker turnaround season amid thin market activity that combined to push prices lower, as per Chemorbis. Spot ethylene and propylene prices moved higher in the US last week due to an outage at Dow’s Freeport, Texas facility. The shutdown at the Texas plant was not expected to last long or have a major impact on supply, although spot prices rallied on the news. Spot prices for polymer grade propylene (PGP) gained US$22/ton last week while spot prices for refinery and chemical grade propylene also firmed up. The July polymer PGP contract in the US also finalized with a rollover from June last week in defiance of the market’s earlier expectations of a US$88/ton price decline. Players attributed the higher than expected July settlement to an earlier shutdown at a Chevron Phillips’ plant located in Port Arthur, Texas, commenting that the contract had been settled before news of the Dow shutdown had reached the market. US ethylene prices also moved higher in response to the Dow shutdown, with done deals for July reported at prices US$83/ton above the spot offers reported from the prior week. In Asia, spot ethylene and propylene prices lost ground over the past week as Formosa’s cracker outage was not able to overpower effects of the end of the cracker turnaround season and sluggish derivative demand. Spot propylene prices, which had initially jumped US$40/ton in response to the Formosa shutdown, have since begun to move back towards their early July levels, with spot prices slipping around US$7/ton over the past week. Sources reported that the market was not very active this week as buyers and sellers held divergent price ideas and deals were subsequently scarce. Spot ethylene prices gained ten dollars in the immediate wake of Formosa’s shutdown but have since fallen off by US$55/ton on a CFR Northeast Asia basis. Traders reported that the Formosa shutdown would not have the strong effect on supply levels initially anticipated by the market as the company is said to have enough buffer stocks to meet its needs for the next month. Additional supplies of Middle Eastern material have also begun to trickle in from Southeast Asia, attracted by the fact that the prevailing spot prices in Northeast Asia carry a premium of around US$50/ton when compared with the spot prices prevailing in Southeast Asia. Sluggish derivative demand was cited as a major contributing factor to the slippage in prices.