NE Asia propylene supply tightening; China import demand uncertain


SINGAPORE (ICIS)–Propylene supply in northeast
Asia is tightening amid uncertain import demand
from China, where two new propane
dehydrogenation (PDH) units are due to come on
stream in the near term.

  • Domestic demand in Japan, S Korea limits
    exports
  • SE Asia demand healthy
  • Two China PDH units may achieve on-spec
    output in mid-July

In South Korea, some traders are having
difficulty buying spot cargoes off producers as
a local downstream polypropylene (PP) maker has
been buying up a fair bit of domestic propylene
supply.

In Japan, domestic demand has recently
increased as some producers are in the spot
market to procure cargoes, resulting in fewer
spot lots available for exports.

One producer was facing propylene shortage as
it was running its cracker at lower rate to
balance the ethylene side of its business.

In southeast Asia, demand is healthy for August
arrivals, with the price gap with the northeast
region narrowing.

This also meant that it was increasingly
difficult for southeast Asian-origin propylene
to find its way to northeast Asia.

In China, buyers are bearish for second-half
August arrivals because they expect two PDH
units to start producing on-spec propylene as
early as mid-July.

The start-ups could lead to some lengthening of
supply in east China, and exert price pressures
on the domestic Shandong and import markets.

It is unclear if non-main port buyers are able
to benefit from potential new supply from east
China.

ICIS Editorial Chart goes here

Focus article by Joson Ng

Additional reporting by Doris He

Photo: Shandong port, China. 12 July 2020
(Photo by Sipa Asia/Shutterstock)

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