For the Quarter Ending June 2023
Propylene oxide prices have shown mixed sentiments in the US market during the second quarter of 2023. During the initial of Q2, Propylene oxide prices have inched lower due to gloomy demand and weak feedstock prices. The US market has been facing challenges as the severe impacts of inflationary pressures, tight monetary policies, as well as the financial sector worries have not vanished. On the other side, core inflation has constantly exceeded the targeted levels set by the US Federal Reserve and has been gradually decreasing at a slower pace, resulting in sifted trade activities. Meanwhile, inquiries from the downstream Polyether Polyol industries have remained tepid as consumption from the construction industries has slowed down amid economic woes, weighing down the prices of Propylene oxide in the domestic market. The oversupplies of feedstock Propylene have limited the positive development of Propylene oxide. However, during mid and end of Q2, Propylene oxide prices increased slightly. The demand for Polyether Polyol has improved as the construction sector has continued to revive in the domestic market. As per the sources, Housing starts rose to a seasonally adjusted rate of 1.631 million units in May to 1.34 million in April, thus supporting the prices to following the uptrend in the domestic market.
Asia - Pacific
Propylene oxide prices have inched lower in the Japanese market during the second quarter of 2023, backed by tepid demand and sufficient inventories. The cost pressure from feedstock Propylene was also insufficient as its prices progressed in a downward trend, reported by market participants. In addition, upstream Naphtha prices have also declined, which further supported the Propylene oxide to follow the downtrend in the domestic market. On the demand front, the inquiries from the downstream Polyether polyol have remained soft, resulting in decreasing consumption rates in the domestic market. At the same time, demand from the overseas market has also remained on the lighter side amidst high inflationary pressure and rising interest rates which weighed down the prices of Propylene oxide. On the other side, Japan's manufacturing activity slipped into contractionary territory in June, with a purchasing managers' index (PMI) reading of 49.8, down from 50.6 in May, indicating a contraction in industrial and manufacturing activities. In addition, Japan's export rates declined in June, emphasizing weak Chinese and Western demand that continues to undercut the post-COVID recovery in the world's third-biggest economy. As per the sources, exports to China declined 11% year-on-year in June. Furthermore, the operating rates were reduced in the domestic market as manufacturers were cautious about building up excessive inventory. Although, the availability of finished stock of Propylene oxide was sufficient to meet the overall downstream demand. Therefore, prices operated at a low level.
Propylene oxide prices have inched lower in the German market during the second quarter of 2023, backed by limited demand and sufficient inventories in the domestic market. The cost pressure from the feedstock Propylene was also insufficient as its prices progressed in a downward trend in the given time frame. On the other side, upstream Naphtha prices have also been observed on the lighter side, which further eased the production cost of Propylene oxide in the domestic market. The firm inflation rates and consequent rise in interest rates to contain it had a heavy toll on the demand fundamentals. The underwhelming performance of construction industries in Q2 is a bleak example of toll. Meanwhile, the inquiries from the downstream polyether polyol industries have remained soft, resulting in declining consumption rates and weighing down the prices of Propylene oxide in the domestic market. Furthermore, some manufacturers have started their destocking activities amid persistent gloomy demand. In addition, Specialty chemicals company LANXESS also expects second-quarter 2023 EBITDA pre-exceptionals to remain below average market expectations. LANXESS now expects the weakness to continue in the second half of 2023, especially in the construction sector, which may further impact the prices of several commodities, including Propylene oxide.
For the Quarter Ending March 2023
The Propylene Oxide price trend shifted during the Q1 of 2023. In the first month, prices decreased due to feeble offtakes from downstream Polyol and Glycol industries amid a reduction in manufacturing activities. However, during the mid-quarter, prices rebounded amid rising inflation and high-interest rates by US Federal Reserve and improved supply chain activities. In the final month of the quarter, an increase in production capacity after the successful start of LyondellBasell’s Propylene Oxide plant at Channelview Texas, with a production capacity of 470 KTPA, decreased the prices amid volatile upstream costs and increase in feedstock prices. At the end of the quarter, Propylene Oxide prices in the USA hovered at USD 1640/MT.
In the Asian region, the price trend of Propylene Oxide showcased a bullish movement during quarter 1 of 2023. At the beginning of Q1, prices rose slightly amid moderate demand and increased feedstock Propylene prices due to firmness in upstream Naphtha. Simultaneously from the mid-quarter, the feedstock Propylene Oxide costs rose noticeably due to stressed availability and volatile upstream crude oil prices amid increased sanctions on Russian products. During the final month of the quarter, prices again spiked due to limited production rates amid reduced imports of Crude Oil and a rise in cost pressure. At the end of Q1, 2023, Propylene Oxide prices in China and Japan witnessed USD 1425/MT and USD 1360/MT, respectively.
The Propylene Oxide prices trend oscillated during quarter 1 of 2023. Initially, the prices declined due to weak demand from Polyol and Glycol manufacturers. However, in the mid-quarter, prices rebounded and rose slightly amid the stressed availability of feedstock Propylene supplies after increased sanctions on Russian Petroleum products, which affected the production rates. Then again, in the H2 of the quarter, the price trend showcased bearish movement, and Propylene Oxide prices fell consistently due to sluggish offtakes. At the same time, the decrease in input costs due to the decline in Natural Gas prices further eased the cost support. At the end of the quarter, the Propylene Oxide prices in Germany hovered at USD 1820/MT.
For the Quarter Ending December 2022
At the beginning of the fourth quarter, Propylene Oxide prices rose slightly on the back of stable consumption levels amid the rise in inflation rates. Then the price trend shifted, and product prices started decreasing in the North American region. From the mid-quarter onwards, the feedstock Propylene prices decreased on the back of firm inventory levels and a reduction in WTI Crude oil prices. Production rates remained firm, and due to this, production costs of Propylene Oxide decreased. The prices declined till the end of Q4. The product offtakes also plunged from the mid-quarter and remained low till the end of quarter 4. At the end of Q4 2022, Propylene Oxide prices in the USA settled at USD 1620/MT.
A decreasing price trend of Propylene Oxide was observed in the Asian region during Q4 of 2022. During the quarter, the product exports from South Korea were affected to the key importer China due to truck strikes near the Busan port amid a decrease in manufacturing and trade activities in China amid disruption in the supply chain due to the rise in covid cases. The market situation improved towards the end of the quarter, and Propylene Oxide prices fell again due to destocking practices by the regional exporters amid ease in the global freight charges. At the end of Q4 2022, Propylene Oxide prices in China hovered at USD 1220/MT.
In the European region, the Propylene Oxide price trend remained the same as in North America. Initially, the product prices rose marginally due to increased production costs amid input supply shortages because of an explosion at the Beixi pipeline. At the same time, offtakes by downstream Polyol producers declined due to reduced orders from Polyurethane industries amid insufficient availability of TDI components. From the mid-quarter, the facilities started operating moderately amid high inflation and reduced offtakes. The product prices decreased by producers like LyondellBasell by reducing their profit margins due to limited operations and offtakes by downstream industries. This trend continued till the end of the quarter, and Propylene Oxide prices in Germany settled at USD 1950/MT at the end of Q4 2022.
For the Quarter Ending September 2022
In North America, the price trend of Propylene Oxide oscillated in the 3rd Quarter of 2022. In the first half of the Quarter, prices decreased consistently due to a reduction in the production costs caused by weak feedstock Propylene prices. Simultaneously, an increase in inventory levels due to diminished product offtakes further negatively impacted product prices. However, from the mid-quarter, the price trend shifted, and Propylene oxide prices rose consistently till the end of Q3 due to the rise in feedstock propylene costs which raised fixed costs on the product values. However, at the end of the 3rd Quarter, the US Propylene Oxide prices settled at USD 1835/MT after a quarterly reduction of almost 12%.
Propylene Oxide's prices fluctuated in Asia during Q3 of 2022. Initially, the price movement followed the previous Quarter's trend, and prices decreased due to the plunge in feedstock Propylene prices, reducing the production costs of PO. However, in the mid-quarter, the price trend revived, and product prices inclined upward due to the rise in feedstock prices when OPEC increased the upstream Crude oil prices and production curtailment on the Government's instructions due to heat waves during summer and power outages in countries like Japan and China. Finally, in the final month of Q3, prices again fell due to a decline in demand from the downstream glycol producers and increased product inventory levels. After a plunge of 22% in the Quarter 2 prices, Propylene Oxide Japan's discussions settled at USD 1240/MT at the end of Q3,2022.
Propylene Oxide prices trend fluctuated in Europe during Q3 of 2022. In the first half of the Quarter, the product prices decreased consistently due to a reduction in feedstock Propylene costs as the downstream orders from Polyolefin producers fell after observing stale demand from durable goods manufacturers. It eased the upstream cost pressure on the product prices. At the same time, the rationing of input supplies from the Russian exporters resulted in pressure on European manufacturers, and the domestic downstream producers cut their operational rates amid the rising inflation. Also, the high inflation depreciated the Euro values against the US Dollar. However, after the mid-quarter, the price movement fluctuated, and product prices increased steadily in H2 till the end of the Quarter. At the end of Q3, Propylene oxide prices settled at USD 2145/MT in Germany after a reduction of almost 9% during the third Quarter.
For the Quarter Ending June 2022
Throughout quarter 2, the price trend of Propylene Oxide fluctuated in the North American region. However, the price rose by 15% from the previous quarter. After global inflation, the feedstock petrochemical Propylene prices surged significantly, due to which Propylene Oxide prices increased sharply in H1 of Q2. However, feedstock prices decreased mid-quarter, negatively impacting the product’s price. Additionally, fuel and energy costs rose in the region. And towards the end of the quarter, Propylene Oxide prices were firm and rose marginally. The demand for Propylene Oxide from downstream isocyanates and Polyurethane manufacturers remained moderate, with firm product offtakes from the regional market.
During Q2, the price of Propylene Oxide contracted consistently in the Asian region. Petrochemical was the hardest hit market after global inflation, and feed propylene prices plummeted sharply after the Russian crude Oil imports in the region, specifically in India and China. Towards the end of the quarter, China cleared its stock inventories of the product after an ease in lockdown and reopening of the Shanghai port as the built stock inventories in China amid the hiatus caused by the three months lockdown. Freight and energy costs remained fluctuated; overall, Propylene Oxide Prices decreased by almost 5-6% from quarter 1 of 2022.
In the European region, the price of Propylene Oxide remained strong and rose noticeably by 19% from quarter 1 of 2022. At the beginning of the quarter, a steep rise in the feedstock Propylene Cost significantly boosted the Propylene Oxide cost. However, in the mid-quarter, product prices stabilized, after firmness in the feedstock cost, and towards the end of the Q2, the product prices were stable and firm. Energy and fuel costs rose in the region due to supply shortages of gas which impacted cost pressure and curtailed the production rates of Propylene Oxide. The demand remained firm from downstream isocyanates, Polyol, and glycol producers with average offtakes of product from the regional market.
For the Quarter Ending March 2022
The North American market witnessed an upsurge in the prices of Propylene Oxide during the Q1 of 2022, on the back of robust downstream demand and higher upstream cost. As construction and automotive industries were growing in the last quarter, the consumption of polyurethane increased, which led to the stronger demand for Propylene Oxide. Besides, the prices of upstream Propylene were also rising, which consequently caused the price hike of Propylene Oxide. Furthermore, skyrocketed crude oil prices, enhanced freights charges, cargoes shortage, and port congestions amidst Russia-Ukraine war tensions added to the already augmented price value of Propylene Oxide. Conclusively, the prices of Propylene Oxide assembled at USD 3725/MT FOB Ohio during March.
The prices of Propylene Oxide soared in the Asia-Pacific region during the Q1 of 2022, on the back of firm demand from end-user industries. The escalated prices of upstream Propylene in the domestic market propelled the prices of Propylene Oxide. Furthermore, the enhanced consumption of Polyurethane in construction, automotive, and healthcare industry, augmented the offtake of Propylene Oxide from various Asian countries. In addition, intensified demand for Propylene Glycol to manufacture fibre glass, accelerated the surge in the prices of Propylene Oxide. Moreover, increased energy costs and freight charges due to the continued conflict between Russia and Ukraine, further exacerbated the price of Propylene Oxide. In India, the evaluated prices of Propylene Oxide were USD 2871.25/MT Ex-Mumbai during March 2022. Likewise, the prices of Propylene Oxide in Chinese domestic market were assessed at USD 1922.5/MT FOB-Qingdao in March 2022.
In Europe, prices of Propylene Oxide soared during the Quarter 1 of 2022, on account of strong demand for Polyurethane and Propylene Glycol. Prices of feedstock Propylene which is one of the governing factors for Propylene Oxide prices, fluctuated in the range between USD 1421 to 1500 per MT in Germany. The consumption of Polyurethane surged in several industries including the construction and automotive sectors to manufacture rigid or flexible foams. Besides, the increased offtake of Propylene Glycol in anti-freeze industries due to the winter season, escalated the prices of propylene Oxide. Furthermore, enhanced propylene prices, exacerbated the prices of Propylene Oxide even more. In addition, the skyrocketed crude oil prices, congested ports, cargoes shortage and increased freight charges further pushed the Propylene Oxide Prices upwards.
The propylene oxide market in North America entered the fourth quarter of 2021 on bullish sentiments. The prices rose incessantly during October and a major part of November on the back of the surge in propylene feedstock prices. Influenced by the crude oil supply shortage in the region majorly due to the low refinery operations owing to the still undergoing repair works at Louisiana facilities after landfall by Ida hurricane, the supply of propylene feedstocks remained tight in the propylene oxide facilities. However, the USA market witnessed tamed propylene oxide prices in December, which settled at USD 3465/MT FOB Louisiana, taking support from wane in propylene prices as well as improved offtakes in international downstream markets post supply chain refurbishment.
The ripple effect of the increase in crude oil prices upon its tightness across the globe caused propylene along with other oil derivatives to gain values in price trends, in turn driving up the prices of propylene oxide in Asia, during October and November. The demand for propylene oxide in the polyurethane industry remained sturdy throughout the quarter. With spot activity gaining pace following slight relaxation in port container crisis across the world in December, the timely arrival of import supplies compelled the traders in India to make negative revisions in propylene oxide contracts that hovered around USD 2934/MT Ex-Mumbai. Meanwhile, Japan market also exhibited a lowering in the prices of propylene oxide during December after reaching record highs in November, however, the decline in percentage was not significant enough owing to consistent offtakes in the polyurethane industries.
The European market bore the wrath of crude oil supply tightness as well as skyrocketing energy prices, both contributing to constraints in manufacturing propylene oxide, thereby causing its prices to climb up significantly throughout the fourth quarter of 2021. The incessant rise in the upward cost pressures amid the surging demand for propylene oxide in the downstream polyol industry caused the manufacturers to implement frequent price revisions on the upward side in order to earn considerable netbacks. Germany prices settling around USD 3595/MT FOB Hamburg during December indicated insubstantial domestic inventories amid improved export activities.