Northeast Asia’s spot propylene market could be entering a new period of uncertainty with the recent escalation in the trade dispute between the US and China.
Demand may weaken as downstream run rates could fall.
On 10 May, prices fell by an average of $2.5/tonne week on week to $877.5/tonne CFR (cost and freight) NE (northeast) Asia, according to ICIS data.
The Chinese yuan weakened in the second half of the week that ended 10 May, making imports less attractive for buyers in the key China market.
Coupled with high domestic inventory in east China, the Chinese propylene import market faces a potential bearish run in the month of May.
Chinese buyers in the main port areas are expected to drive a hard bargain, quoting prices at the low end of the assessed price range at around $850/tonne CFR CMP. It remains to be seen how sellers would react.
Sellers have some time on their side to sell their June-arrival spot allocations and with some of them expected to bide their time to gauge Chinese demand amid the market uncertainties.
Some others could be looking to locate outlets outside of China in search of higher prices.
In China, Hebei Haiwei Group’s propane dehydrogenation (PDH) plant with a 500,000 tonne/year propylene capacity was taken off line for maintenance. This would lead to reduced supply to users in the Shandong market, hence, provide support to prices.
Propylene prices in Shandong on 10 May stood at average of yuan (CNY) 6,775/tonne ex-tank, down CNY175/tonne from 6 May, according to ICIS data.- source; icis.com -