Quarterly Update on Global Propylene Market
For the Quarter Ending March 2021
During the Q1 of 2021, the supplies of propylene were tight in the region, it bounds the margins for the downstream derivatives market resulted in increment in demand, as the several petrochemicals production unit shutdowns emerge on the US gulf region amid deep freeze weather. Major plants such as LyondellBasell and INEOS olefins declared shutdown in mid-February amid the extreme weather conditions resulted in multi-fold surge in the prices of Propylene in US. Domestic Propylene (PGP) prices surged to USD 1950 per MT, to an all-time high in mid-February.
The supply of Propylene remained balanced in the Asian region during the first quarter, owing to the addition of new facilities in China, followed by the resumption of major facilities in the South Korea including the LG Chem. Yeochun NCC (YNCC) resumed its production during the second half of Q1 2021, after a turnaround and announced expansion of its Ethylene and Propylene unit. However, Asian suppliers diverted their stocks to cater to the western demand for better revenue, as the arbitrage with European and North American region opened. The demand in Asia surged, due to the better offtakes from the downstream sector throughout the quarter. The prices of Propylene CFR China crossed the USD 1000/MT in mid-February.
The supply of Propylene in the European region remained tight throughout Q1, as a repercussion of reduced production from the refineries amid the ongoing pandemic and lockdown restrictions. The situation got aggravated, as the key Propylene supplier declared planned turnaround in early February. However, the demand persisted a healthy trend throughout the quarter. The exports trend shifted from the US to Asian suppliers, due to the extreme weather conditions in the US declined the transport of cargoes. In terms of prices, Europe remained to be the most feasible region.
For the Quarter Ending September 2020
Propylene supply across Asia was observed getting tighter by the end of the Q3 with price discussions gradually picking up particularly in northeast Asia. Various planned and unplanned outages affected the functioning of fluid catalytic cracking (FCC) and steam cracking Naphtha units in Japan. Strong domestic demand in South Korea restricted the cargo availability for exports. Demand in China was more or less stable with buyers indicating the commissioning of two Propane Dehydrogenation (PDH) units in July possessing a total nameplate capacity of 1050 KTPA. Formosa Petrochemical Corporation (FPCC) announced maintenance shutdown of its No. 3 cracker located in Taiwan on August 11 for nearly 1.5 months. The cracker has Propylene production capacity of 600 KTPA. In addition, Yeochun NCC (YNCC) and SK Global Chemical were heard starting turnarounds for their crackers from August to October. With producers highlighting tight regional supply, CFR China Propylene prices were assessed at the USD 900 per tonne levels in mid-September. Demand for Propylene Derivatives was seen gaining strength by the end of into Q3.
The third quarter Propylene prices were settled at a narrow range with the demand outlook largely mixed-to-low owing to fragile economic conditions. Prompt availability of the product was affected largely by unexpected cracker turnarounds in early-August which were resolved by the first half of September. The ongoing outage at Borealis’ Stenungsund, Sweden cracker further exacerbated the shortness in product availability. The pricing graph last showed an upward trajectory in July when it was assessed around USD 780 per tonne FD NWE and then gradually tapered off by the end of the quarter. While refineries continued to run at reduced rates, primary driver Naphtha was on a slightly lower edge in August compared to July. Some players reported lackluster demand for Propylene derivatives while others surging Polypropylene consumption as the sweet spot.
Regional Propylene supply was affected by the prolonged shutdown of BASF Total’s Port Arthur cracker in Texas cracker. Hit by the pandemic-induced slowdown, the America’s combined refinery run rate was maintained around 75-80 pc due to depressed gasoline demand, further limiting the Propylene production. Series of force majeures declared due to hurricane Laura led to temporary disruption in the regional supply. US Gulf Propylene prices showed an uptick amid production issues and prospects turning positive as manufacturing activity gradually picked up during the quarter. The US DEL (delivered) Polymer-Grade Propylene (PGP) contract prices were settled at one-year high to around USD 715 per tonne and Chemical-Grade Propylene (CGP) was assessed at USD 683 per tonne in July.