For the Quarter Ending December 2022
North America
Overall, the Propylene market in the North American region has remained stagnant on a downward trajectory. Although, the moving pace slowed considerably, as the resumption of market activities in the European markets has kept the export market active. However, the soaring inflation rate and hiked interest rates levies a substantial impact on the offtakes in the domestic market. In terms of supply, as the quarter moves, firstly, the operating rates at the Naphtha crackers have adjusted to sustain the supply-demand gap and control the spread with upstream and downstream value chains. At the same time, the operations were hindered by the end of the quarter as a blizzard storm in the US impacting with power outages and transport disruptions in the domestic market. As a ripple effect, the DEL US Gulf discussions for Propylene Polymer grade were settled at USD 957 per tonne during the quarter ending December 2022.
Asia Pacific
In the fourth quarter of 2022, the Propylene market in the Asia Pacific region has observed little to no shift in overall dynamics, and bearish sentiments have consistently prevailed across the region. The demand outlook in the regional market has remained subdued amidst the indigent performance of the polymer industry; almost all major economies in the region have surplus availability of Polypropylene as per sources. At the same time, the market players were highly cautious about new developments in the domestic market and adjusting their operations to their full extent to sustain their netbacks, and several PDH plants in China delayed the resumption of market activities in the region. A similar outlook has prominently prevailed in the South Korean market. YNCC has delayed the restart of the 450,000 MT plant till January 2023 while analyzing the current market dynamics. The data released by the Korean authorities have showcased that the domestic export market has weakened steeply in the fourth quarter. As a ripple effect, the FOB Busan discussions for Propylene were assessed at USD 853 per tonne during the quarter ending December 2022.
Europe
The Propylene market in Europe observed a considerable rebound and quoted offers prompted by a substantial recovery in the fourth quarter of 2022. This development has been majorly attributed to the rebound in market practices post the summer holidays, the commercial and industrial activities resumed. Staggering slowly as the market recovers, the presence of the fresh challenges of high inflation and energy cost clouded the region with numerous uncertainties with the ongoing and upcoming prospects. In response, major manufacturers across the European markets have decided to curtail the run rates at their Naphtha crackers to sustain a supply-demand balance. In December, the EU restricted the consumption of Russian supplies, and the G-7 price cap of USD 60 per barrel has enforced strengthened wait-and-see sentiments amongst the Crude Oil players, as the anticipation for retaliatory sanctions has strengthened. In terms of demand outlook, the sufficient inventories of PP have suppressed the inquiries of Propylene polymer grade throughout the quarter, and the FD Genoa (Italy) was assessed at USD 632 per tonne in December 2022.
For the Quarter Ending September 2022
North America
In the third quarter of 2022, the Propylene market in the North American region witnessed mixed sentiments that differentiated based on grades. The Propylene polymer grade witnessed consistent bullish sentiments, whereas the refinery grade fluctuated based on cost support from feedstock and demand outlook from the domestic and overseas markets. Consistent poor inland logistics have primarily plagued the U.S. Propylene market, & with a deficit in the spot offers and insufficient pricing competitiveness on the exported volumes. As a ripple effect, the DEL US Gulf discussions for Propylene grade settled at USD 1120 per tonne during the quarter ending September 2022.
Asia Pacific
Overall the Propylene market in the Asia Pacific region remains subdued, with bearish sentiments throughout the region during the third quarter of 2022. The cost support from the feedstocks has consistently fluctuated, and OPEC+ consistently manipulated the Crude Oil supply by curtailing the output, despite its negligible impact across the value chain. The poor performance of Propylene is primarily attributed to the lackluster demand, as the region witnessed an oversupply of downstream PP. In addition, the operations at the downstream facilities were curtailed in China amidst the extreme heat-led power rationing. Several producers have curtailed Propylene production significantly as a ripple effect. The FOB Qingdao discussions for Propylene were assessed at USD 890 per tonne during September 2022.
Europe
In the third quarter of 2022, the Propylene market in the European region witnessed a steep plunge in the offers quoted in the domestic markets. The commercial and economic activities remained under pressure for the third quarter of 2022 amidst the summer holidays and the growing threat of a European recession. Therefore the inquiries were more concentrated on a long-term contractual basis, and the spot inquiries remained muted during July and August. Although the market reopened in the last month with numerous uncertainties, the negotiation was negligible. Due to the rising inflation, the market participants were keener towards conservative buying or Asia suppliers. As a ripple effect, the FD Hamburg discussions for Propylene were assessed at USD 460 per tonne during the quarter ending September 2022.
For the Quarter Ending June 2022
North America
In the US, the prices of Propylene steadily decreased throughout the second quarter of 2022. During May, most market participants took an early off for the long memorial day weekend. The decreasing price trend of Propylene was abetted by the ongoing war between Russia and Ukraine, inflation, and various Covid-19-related lockdowns in the Chinese market. Polymer Grade propylene was being traded at a discounted price during the second quarter of 2022. The discount widened, and at the end of Q2 2022, the cost of Propylene reduced even further due to the weak market sentiments in the American market. Increased cracker and PDH margins also assisted the decreasing price trend in the US throughout Q2 2022.
APAC
In the Indian market, the prices of Propylene surged during the start of the second quarter of 2022 due to rising upstream Naphtha prices. Tight supply and strong demand from the downstream industries increased the prices. The price trend significantly changed in the following months of 2022, owing to increased cracker spreads across the country. The cheap supply of upstream naphtha and feedstock crude oil abetted the decreasing price trend at the end of Q2 2022. In the Chinese market, the price of Propylene was very volatile because of the sluggish demand caused by the Covid-19-related restrictions and then witnessed a price hike as the regulation eased. At the end of Q2 2022, the price dropped again in China because of a steady supply of feedstock crude oil from Russia.
Europe
In the European market, the Propylene price witnessed a massive spike during the start of the second quarter of 2022 owing to several European countries' ban on Russian crude oil and natural gas imports. The sanctions raised the price of feedstock crude oil due to the tight supply, which drove up the Propylene prices in Europe. In the following two months in Propylene European market, the prices consistently decreased. The demand for fuel in Europe forced increased run rates in refineries, which produced upstream Naphtha as a by-product. This sudden rise in the supply of upstream Naphtha contributed to the decreasing price trend of Propylene during the last two months of Q2 2022 in Europe.
For the Quarter Ending March 2022
North America
In North America, the price of Propylene was observed to be increasing in the USA in the first quarter, with prices hovering around USD 510/ton-546/ton for Propylene Refinery Grade Del US Gulf, and a sudden spike of 14.4% in March. There was an overall decrease of 5.7% in Q1 compared to the previous quarter. The USA, which contributes 10% of the world's total Propylene exports, majorly to Colombia, saw an increase in freight charges due to the ongoing Russia-Ukraine war. Also, the operational cost for Fluid Catalytic Crackers increased due to record-high energy costs over the last four weeks. With all propane dehydrogenation units operating at a healthy rate and few supply bottlenecks, polymer-grade Propylene's price-maintained stability in the first quarter.
Asia Pacific
During Q1, the prices of Propylene surged for March on the back of Crude oil prices heading for historical highs due to the prevalent turbulence in Europe and a ban on Russian Oil and Gas imports by nations, with prices hovering around USD 1027/ton-USD 1073/ton FOB Busan in March in South Korea. Persistent supply tightness in feedstock crude oil and natural gas and higher downstream demand from construction, polymers, and fuel additives led to an increase in the prices of Propylene. China, a significant importer of around 34.4% of Propylene from South Korea, saw an escalation in shipment and freight charges.
Europe
Europe saw an increase in the price of Propylene in the first quarter with a sudden increase of 7.8% in March and prices hovering around USD 1370/ton-USD 1422/ton FOB South Hampton in Germany with its contribution of 3.99% of total world exports majorly to France. Surging upstream petroleum oils prices due to the Russian invasion of Ukraine has put pressure on the merits of Propylene. Higher demand from downstream propylene glycol and tighter margins prompted refineries to pass on higher costs in the production rates. Therefore, higher-cost support from the upstream propane strengthened the propylene glycol producers regarding the increment in the offered quotations.
For the Quarter Ending December 2021
North America
The North American propylene market witnessed an unprecedented consistency in trend throughout Q4 of FY21. While the refinery grade propylene remained largely inelastic to the downstream market trends, polymer grade propylene market prices fluctuated in sync with the downstream polypropylene prices. After a supply starved third quarter where refinery production had been hit and supply chains disrupted along the gulf coast during the hurricane season, the first part of Q4 continued to be a seller’s market. The trend however reversed during the second half of Q4 as prices of feedstock naphtha and LPG started to fall since the first week of November and continued their downtrend to the end of December. The average prices of refinery and polymer grades of propylene were assessed at 520 USD/MT FAS Houston and 1640 USD/ MT FOB Houston (which is a 5% decrease from the Q3 average) respectively.
The outlook for Q1 of FY22 looks uncertain on the back of a new wave of pandemic causing lockdowns and disruption of supply chains across North America. A more positive market could be expected from the second half of Q1 as demand could recover from the temporary slump.
Asia
The North-East Asian region saw a gradual shift in cracking capacity with Naphtha outperforming Propane as the preferred feedstock due to increasingly lower arbitrage margins from US LPG imports. Although propane dehydrogenation capacity in China had been increasing over the years, there had been a reversal in trend for the last three to four quarters as China is becoming more and more import dominant for LPG and as a result losing out in the arbitrage market as imports from US and the Middle East are becoming insufficient for domestic consumption. A slightly higher import price range was observed for propylene with average CFR prices assessed at 1020 USD/Mt compared to 1010 USD/Mt in Q3. While the FOB prices for South Korea had been assessed at 1010 USD/Mt for Q4 which is a 25 USD/Mt higher than the Q3 average.
India however witnessed a buyer’s market largely because the fourth quarter (of the calendar year) is characterized by a long festive season when demand for chemicals typically falls. The prices fell from an annual high of 1190 USD/Mt in the month of July to 930 USD/Mt in the month of December.
Europe
European markets had seen a gradual shift in imports from the regional markets to Asian propylene owing to higher arbitrage margins during the fourth quarter of FY21. While the average price of propylene sourced from domestic trade were assessed at 1245 USD/Mt on an FD Hamburg basis, the import prices from North-East Asia had been assessed at 1135 USD/Mt on a CIF Hamburg basis during Q4 of FY21. Thus, propylene from Asia was cheaper by at least 50 to 60 USD/Mt throughout Q4 as per the assessment of ChemAnalyst’s market Intelligence unit.
The outlook for Q1 of FY22 looks positive amidst the new wave of pandemic as strict quarantine measures in the North-East Asian region means that logistical bottlenecks could persist through out Q1 of FY22. This could result in domestic manufacturers and traders quoting higher prices as imports from Asia could be harder to come by.
The overall market outlook of Propylene strengthened in North America during the third quarter of 2021. In the 2nd week of September, leading companies like ExxonMobil and Dow Chemicals at Baton Rouge, Louisiana, and Taft, Louisiana, respectively restarted the production of Propylene after some plant shutdowns due to the hurricane Ida. Propylene crackers of NOVA and Enterprise were reported offline in Q3 2021. Suppliers focussed on building inventories as the demand from the downstream sectors remained strong during the quarter as polypropylene trended upwards due to the significant demand pull. According to the market experts, the supply for Propylene dropped by 5-8% due to the occurrence of hurricane Ida. DEL US Gulf Price of Propylene was last assessed at USD 1850 per MT in September.
Propylene prices in the Asia Pacific region remained range bound as inquiries for the downstream Polypropylene improved but supply stayed ample during the third quarter. The supply of Propylene increased across the region with the commencement of GS Caltex's new steam cracker plant on July 5th at Yeosu. Another steam cracker plant with a capacity of around 410 KTPA extended the ease to the supply fundamentals. However, the prices of Propylene in the domestic market continued to dwindle followed by the weaker demand in several parts of Asia due to new delta variant cases. In China, discussions for downstream Polypropylene remained thin due to the decline in the market activities amid Covid infections. In India too, sufficient availability amidst the firm demand pushed down the prices of Propylene from USD 1175/MT to USD 1158/MT per MT within the quarter.
The supply of Propylene in Europe region escalated in the third quarter of 2021 backed by the recovery of PDH units, crackers, and refineries. The demand grew effectively throughout the quarter from the downstream sectors. In Germany, the prices of Propylene traced upwards trajectory and settled at USD 1305/MT FD Hamburg in Q3 2021 followed by the significant rise in the prices of its upstream.
