Asian Propylene Boosted by Naphtha Shortage and Cost Increases

Sydney (Platts)--2Feb2009

Asia's naphtha shortage lifted propylene prices by $22.50/mt FOB South Korea and $37.50/mt CFR China from the close of market Friday to $607.50/mt and $667.50/mt, respectively, at 0430 GMT Monday.

The naphtha shortage and ensuing cost increases have hindered steam cracker operators from raising plant runs, also curtailing propylene production. 

China, the region's largest propylene importer, re-opened for trade Monday after a week-long national holiday for the Lunar New Year and was making enquiries to buy cargoes for delivery in second-half February and first-half March.

This was contrary to earlier expectations -- industry sources had expected little or no new demand from China after the break, as consumers and distributors there had re-stocked aggressively before the holiday.  

China's buying spree began as early as December and continued into January, and sources believed it would take weeks to digest the cargoes.

Statistics from China's customs office indicated that the country's propylene imports for December were double its typical monthly quantity at 118,000 mt.  Early Monday, propylene buying interest was seen at $605/mt FOB Korea for cargoes to be loaded H2 February and H1 March. Buying interest in China was seen at $660/mt CFR for cargoes to be delivered H2 February and H1 March.

The naphtha CFR Japan price benchmark has gained $80/mt in the past month to be $435.25/mt at the close of market Friday. 

--Joanna Lim, joanna_lim@platts.com (www.platts.com)