Propylene Prices Slowdown Despite Production Cuts in Europe
- 06-Dec-2022 2:41 PM
- Journalist: Rene Swann
Frankfurt (Germany): The consistent rebound in Propylene prices over the past couple of weeks has stabilized in North-west European markets. Although on the first Friday of December 2022, a slight slowdown from 2.40% to 2.68% was witnessed on a week-on-week basis. Despite the production cuts in operations at the major production facilities, that only brought a stable trajectory in the offers for the downstream Polypropylene in the European markets. Since the December start, production cuts have impacted the availability of specific grades of Propylene, which was counterbalanced by the weaker demand outlook from the downstream market.
As the market activities entered December, the Propylene offers quoted at the domestic market were more prone to additional drops amid destocking practices that were likely to carry out ahead of the year's end. In response, the December Propylene contract agreed with a reduction. In addition, the high-running stocks of Propylene in the distribution channel and spot market may also trigger intense negotiations from the downstream players amidst the conservative buying sentiment due to a consistent inflation increment. Furthermore, the projections showcased that the slowdown will persist in the next quarter of 2023, triggering a wait-and-see attitude among the manufacturers that is further coupled with the cautious approach among the spot market players over the procurement of Propylene.
In addition, the offers for crude oil in the international market have dropped in the last week, showing that the current market confidence is still insufficient. Such behaviors in the crude oil market made the investors and market players more cautious, which seems to remind OPEC to make necessary decisions to boost market confidence. Otherwise, the crude oil offers will consistently trace its downward trajectory. Several market experts concluded that the impact of the COVID-19-related lockdown significantly diminished November's China crude oil demand.
According to the ChemAnalyst pricing intelligence, Propylene prices in the European market will trace a downward trajectory due to the supply-demand gap. The surplus availability of Propylene against the inadequate domestic demand (triggered by the rising cost of living) will likely provide the market participants an adequate window to negotiate the Propylene offers further. The numerous external factors negated the chances of restoring market confidence for Propylene, further dampening the domestic players' enthusiasm.