For the Quarter Ending March 2022
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.
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 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
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.
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.
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.
For the Quarter Ending September 2021
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.
For the Quarter Ending June 2021
Almost all Propane Dehydrogenation (PDH) units in the US gulf coast region recovered from the devastating impact of the winter storm Uri, and improved operating rates supported the supplies of Propylene throughout the region. Market sentiments showed gradual improvement over the previous quarter and stabilized by the April end. Demand in the North American region was buoyed by growing enquiries from the domestic as well as overseas market. Offtakes from the regional plastic market have been up as economies are rebounding after the COVID impact. Prices in the US remained on a downtrend during the H1 of Q2 and then stabilized in the second half with FOB Texas discussions at USD 710-745 per tonne in June.
Propylene supplies in China were tight in the second quarter of 2021, as several refineries and PDH units in China were on a turnaround in the first half of the quarter, supported by the tight market outlook from the key exporter South Korea. Start-up of LyondellBasell’s 400 KTPA downstream Polypropylene plant in Ulsan, South Korea in June further bolstered the demand outlook. Amidst rising inflation rate in China, the prices of raw material continued to remain firm till May ending and started to stabilize since early June as a repercussion of strong wait and see attitude from the spot buyers. High-cost raw material curtailed the production margins for several downstream manufacturing units. FOB Qingdao (China) Propylene pricing discussion settled at USD 1281 per tonne in June.
Propylene supplies in the European region showed mixed sentiments as several PDH units, crackers and refineries were under maintenance during the first half of the second quarter. However, imports from Asia increased after the domestic demand turned high than supplies. Key Asian exporters included Malaysia, South Korea and China. Demand remained strong as the enquiries piled up from the downstream PP producers. Due to better demand and restricted supplies, Propylene prices continued to maintain firmness in Q2 with CIF NWE offers settling at USD 1400-1420 per tonne, to its several years high in early June.
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.