What caused Asian Polyolefin Elastomer prices to gain substantially
What caused Asian Polyolefin Elastomer prices to gain substantially

What caused Asian Polyolefin Elastomer prices to gain substantially

  • 01-Apr-2022 4:35 PM
  • Journalist: Yage Kwon

Polyolefin Elastomer prices in Southeast Asia and Far East Asia continue to gain upward momentum throughout March 2022. Polyolefin Elastomer (POE) market has been strengthening owing to stable demand pressure from the downstream industries and rising cost pressure from upstream olefins.

All key Olefins have witnessed a substantial rise in prices since the beginning of the crude oil volatility in the aftermath of the Ukraine-Russia war. Naphtha and Raffinate form key upstream of Olefins where Naphtha caters to C2 and C3 olefins while Raffinate results in the production of C4 olefins. Both Naphtha and Raffinate closely follow the crude oil trend and recently Naphtha prices broke charts in Asia in early to mid-March owing to a whooping climb in crude oil prices. Raffinate prices have also gained substantially consolidating on a bullish rally in crude oil.

Rising Naphtha and Raffinate prices left little space for price normalization for olefin producers. Ethylene, Propylene, and Butylene have been soaring in all major Asian markets which resulted in increased cost pressure for POE production. In lieu of rising costs, POE producers have opted for a significant rise in prices and consequently, POE prices have increased considerably. Likewise, Polyolefin Elastomer in South Korea gained around 4.5% since the beginning of the month and was assessed at USD 2523 per MT on FOB basis for Butene based POE while Octene based prices were settled at USD 3302 per MT FOB Incheon observing an increase of more than 3% in March 2022.

Domestically, the demand for POE remained firm in South Korea as major consumption sectors including consumer goods, packaging, and other industries. South Korea also exports POE majorly to China and the recent resurgence in Covid cases resulted in demand plummet while hampering transportation and logistics.

As per ChemAnalyst, “Energy feedstock prices have normalized up to a certain extent in recent assessments where WTI crude oil prices dipped under USD 100/b signifying a change in market sentiment. Significant deterioration in crude oil prices may provide ample opportunity for POE producers to decrease overall prices of the material and providing necessary relief for the downstream buyers. However, overall POE market outlook appears to be bullish as demand fundamentals appear to be stable to firm while olefin prices remain robust in the region.”

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