For the Quarter Ending March 2023
North America
In the first quarter of 2023, the Propylene market in North America showed mixed sentiment. Initially, the prices of Propylene decreased and continued to do so until the end of February due to an abundant supply of feedstock crude oil in the domestic market. Additionally, demand from downstream products such as Propylene Oxide (PO), Polypropylene (PP), and other value chain products remained sluggish because of weak consumer sentiment in the region, which was caused by a slow start in key end-user markets like resins and packaging industries. However, Propylene prices started gaining upward momentum in the last month of the quarter due to the cost support from feedstock WTI Crude oil prices, which rose after the U.S. Federal Reserve delivered an expected hike in interest rates. This was in response to the recent turmoil in the financial market spurred by the collapse of two U.S. banks. On the other hand, downstream demand from both domestic and overseas markets did not improve much. As a result, the prices of Propylene were evaluated at USD 459/MT for refinery grade and USD 1016/MT on March 31.
Asia- Pacific
Propylene prices in the Asia-Pacific region exhibited a mixed trend during the first quarter of 2023. The Chinese Propylene market witnessed a positive start to the quarter, thanks to the resurgence in market activities after the government abandoned its zero-COVID policy. This led to an increase in demand for the product, mainly due to the rise in procurement drive from downstream PP, PO, and other value chains. Since the conclusion of the Lunar New Year holiday, market participants have restocked the available material. However, the prices took a dip in March, primarily because of the fall in upstream Crude oil and feedstock Propane prices to varying degrees, which provided limited cost support. Moreover, there was a decline in demand from downstream PP due to unplanned shutdowns, resulting in less procurement of Propylene. Despite this, import availability of Propylene from South Korea and Japan remained stable in Chinese ports, leading to sufficient inventory levels in the domestic market. Some Propylene suppliers were willing to destock due to high inventory, leading to a significant cut in their offers. Therefore, the prices for FOB Qingdao and CFR Shanghai settled at USD 910/MT and USD 930/MT on March 31.
Europe
Propylene prices showed fluctuation in the European region during the first quarter of 2023. In the first two months of Q2, the overall prices of Propylene in the German market took an unprecedented surge due to a rebound in manufacturing activities despite high energy costs. In terms of supply, inventories were relatively adequate due to high operating rates and the continuous flow of imports from the overseas market. Despite this, market participants reported few instances of new orders, and demand from downstream PP, PO, and other value chains remained stable in the regional market. However, Propylene prices started to follow a declining trajectory in the final month of Q2 because market sentiment had turned increasingly bearish as a bleak macroeconomic environment cast a pall over European markets. In addition, operating rates dropped in the domestic market owing to less consumption from downstream industries. In the meantime, the upstream crude oil prices decreased, lowering the cost pressure on the Propylene market. Moreover, imports from the Asian market turned cheaper as prices decreased in their respective market. Therefore, the price of Propylene reached USD 790/MT FD South Hampton on March 31.
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.
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.
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.
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.
