Slow Demand and Ample Supply Will Rule Across the European Propylene Market in H1 2023

Frankfurt (Germany): The Propylene market in the European region has consistently observed a bearish outlook for most of the terms during H2 of 2023. The prevailing market dynamics and soaring inventory levels against the downstream players' inadequate participation have suppressed the Propylene market outlook in January 2023. As per the market experts, the prevailing sentiments of the supply-demand deficit in Propylene will likely prevail throughout the first half of 2023.

Since the G-7 group, along with the supporting nations, has put a price cap on Russian Crude supplies as a retaliatory measure, the Russian authorities have decided to stop supplying Crude Oil cargoes to the nations that are strictly adhering to the price cap. In response, the market players were anticipating "to keep the netbacks positive," the Russian players might likely curtail the Crude Oil production levels by approx. 20% to the November 2022 levels. As a ripple effect, the participation of other players has concentrated on the OPEC nations enforcing severe volatility over the prices of Crude Oil in the upcoming terms in 2023. These developments are majorly driven by economic uncertainties and political unrest that pressurized the Propylene fundamentals in the European markets.

In terms of Propylene feedstock Naphtha, the supply has constraints as the Russian sanctions took a toll on the availability of volume in the region. The prevailing dynamics for Naphtha in 2022 have ended on a volatile note, especially after the EU's embargo of Russian energy supplies and the price cap on Russian Crude Oil by G-7. It is further anticipated that the ongoing market trend will follow up in the first quarter of 2023, and the domestic Propylene or other olefins players will seek other sources.

In terms of key downstream, Polypropylene has considerably impacted the upstream value chain. The participation of overseas players has kept the terminal inventory levels for Polypropylene running at higher levels. In response, it is anticipated that most of the polymer markets will consistently remain tedious due to bearish market dynamics in 2023.

As per the ChemAnalyst Pricing Intelligence, the Propylene market in the European market will remain uncertain and filled with numerous volatilities in the domestic market during H1 2023. However, market analysts have anticipated that the Propylene market in H2 2023 will observe considerable growth from the intermediate and end-use chemicals industries. In contradiction, the demand for Propylene from the Polypropylene market has remained dull, and enthusiasm amongst the domestic players will remain dull throughout 2023.