Propylene Market in European Region Rebounds Despite Different Dynamics
Propylene Market in European Region Rebounds Despite Different Dynamics

Propylene Market in European Region Rebounds Despite Different Dynamics

  • 21-Nov-2022 12:32 PM
  • Journalist: Peter Schmidt

Frankfurt: Overall, the Propylene market in Europe has observed a considerable increment in the spot offers, although the growth rates vary according to diminutive market dynamics across the countries. Since the November start, Propylene prices have soared by 29.66%, 32.74%, and 31.63% in Germany, the UK, and Italy, respectively, compared to the Propylene quoted in the last week of October 2022.

Numerous market experts stated that the rebound in the market dynamics soared amidst the improved feedstock Propylene demand from the downstream polypropylene manufacturing facilities. Traditionally, building and construction activities generally improve in the year's second half. However, the overall outlook in the second half of 2022, the domestic market, was primarily influenced by external global factors such as sanctions on Russian energy supplies, cancellation of the Nord Stream II gas pipeline, and disruption of natural gas supplies from the Nord Stream-I pipeline. In response, commercial and economic activities have been pushed further after the conservative buying sentiment consistently clouded the domestic market dynamics in the third quarter of 2022.

The market activities rebounded soon after the summer holidays in Europe ended. Whereas in the meantime, the Propylene offers have swindled forward despite the inadequate cost support from the upstream Crude Oil. In recent terms, the OPEC+ alliance has announced curtailing two million BPD of crude output amidst insufficient demand and started to lay out the groundwork. As a ripple effect, the overall value of Crude Oil in the international market witnesses a temporary increment in the short term.

The possibility of natural gas rationing has further improved the production cost, which differentiated the opinions of the market players in the region. Germany's BASF announced cost-reduction measures that were likely to impact the market till the end of 2024 to save USD 495 million annually amidst the uncertainty of high natural gas prices. Whereas, in contradiction, Austria's Borealis announces it to stick with current operating rates and will not downsize or shrink the production margins.

As per the ChemAnalyst pricing intelligence, in both scenarios, the cost production for Propylene has passed over to the end-use consumers, and the Propylene offers will likely persist on an upward trajectory in the domestic market.

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