For the Quarter Ending June 2021
As the US chemical industry showed recovery from the devastating impact from the winter storm Uri, better operations at refineries and PDH units supported the ease in supplies of Propylene Oxide in the North American region compared to the previous quarter. However, better availability did not impact the regional pricing which continued to rally upwards throughout the quarter. FOB Louisiana (USA) discussions settled at USD 2581 per tonne in June, showing an increment of USD 356 per tonne from the levels seen in March. The supply-demand outlook remained unbalanced in the second quarter as seasonal offtakes improved from the downstream polyol manufacturers to meet surging demand from the construction sector. The demand was further strengthened by rising polyol and Propylene Glycol exports.
The supplies of Propylene Oxide in the Asia Pacific region were ample to cope up with the end use segments, but the demand scenario was different in several major economies throughout the region. In China, due to surged inflation rates, the prices of the key feedstock Propylene remained firm for a larger part of Q2 which further led to resistance among the buyers. FOB Qingdao PO discussion was settled at USD 1981 per tonne in June. Chinese Propylene Oxide manufacturers reported consistent orders from the downstream polyether polyol manufacturers increased steadily and the prices showed gains in support. In Southeast Asia, second COVID wave severely impacted the downstream markets, thereby denting the demand.
The supply conditions in the European region remained tight as turnaround at several PDH, refineries and plants limited the Propylene availability to produce Propylene Oxide in the second quarter of 2021. However, some supply constraints were eased as imports from the North American region improved after a sharp slump seen in March 2021. Pricing trend was in alignment with the demand trends which remained high due to consistent offtakes of the PO derivatives from the construction sector. The demand for Propylene Glycol showed resilience from the cosmetics and pharma industries.
For the Quarter Ending March 2021
During the Q1 2021, the supplies of PO remained tight as major US Propylene plants were shut for the planned maintenance during the first half of 2021. The tight supply situation was further aggravated as several Propylene producers remained disrupted, amid deep freeze weather in the US gulf region. However, improved consumption from the downstream polyols, and polyurethanes sector surged the demand in the region. Due to inclined demand and shortage in supplies, regional PO prices witnessed a multi-fold surge in March settlements with prices crossing USD 2600 per Mt in mid-March.
PO supplies were increased during the first quarter of 2021 as turnarounds in several major plants in the north-east Asian region come to an end. Furthermore, addition of new production facilities in China surged the overall supply in the APAC region. However, PO market in China remained muted due to Chinese Lunar New Year holidays, resulting in mixed results from the demand side. In the second half of Q1, consumption from the downstream propylene glycols and polyols improved triggering increment in the overall market prices.
The supply of Propylene Oxide in the European region remained tight throughout the first quarter as a repercussion of reduced production of feedstock from the refineries amid the rising pandemic cases and fresh lockdown restrictions. The ongoing situation advanced, as the imports from Asia were hampered due to the Chinese lunar new year, followed by the disruption caused by the US extreme weather conditions. However, the demand persisted to stay strong throughout the quarter from the regional polyol manufacturer.
For the Quarter Ending September 2020
Producers were heard re-examining their spot and contractual sales amidst the astonishing drop in overall Propylene Oxide supplies due to scheduled maintenance and upcoming turnarounds at several manufacturing facilities. Sturdy demand for Polyols also directed some of the integrated PO producers to adhere a shift to Polyol production rather than selling Propylene Oxide directly. As China’s furniture and home furnishing segment entered into the peak demand season after observing 16.4 percent hike in July, demand for downstream Polyols rallied upward in September. Supply tightness rose as several Shandong-base PO plants underwent sudden environmental checking compelling them to reduce their production rates. With scheduled maintenance turnaround of Nanjing Hongbaoli’s Hydrogen-peroxide Propylene Oxide from August end to late September, overall operating rates of PO plants in China prominently reduced to 77 per cent by the quarter end. Spot prices of PO in China previously hovering at USD 2350 per MT, touched USD 2400 per MT by September end.
Strong revival in downstream Polyol demand positively affected the market sentiments of Propylene Oxide (PO) in North America. An abrupt mismatch due to limited production and unexpected rebound in downstream demand widened the demand and supply gap for its derivatives in the market. In line with the steep inclination in demand patterns, prices of Propylene Oxide in the region saw a quick pickup by September. With force majeures declared on several production units on the Gulf coast amidst fears of Hurricane Laura, the overall supply of Propylene Oxide in the region tightened leading to further increase in its average prices for the quarter.
With appreciable revival in demand from the downstream segments, local Propylene Oxide (PO) producers were observed increasing their operating rates in quarter ending September. Tightened supply in the global market directly affected the market fundamentals of Propylene Oxide in Europe leading to low inventory levels amidst substantial demand for the downstream Polyols. Although offtakes from the downstream Mono-propylene Glycol (MPG) and Polyethylene Glycol (PEG) segments remained low but it laid a minute impact on the overall supply fundamentals which are already rallying upwards on strong Polyol demand.