Ethylene and Asian propylene prices extend the trend of upwards for three consecutive weeks due to the increasing crude oil price and stronger demand. Despite the current concerns about the spread of Delta variant, The recent demand recovery in downstream markets appears to be gaining stronger momentum.
However, Traders note that the pace of ethylene price growth has slowed, because prices have increased 100 USD/ton over the past two weeks. For propylene, Prices have increased slightly, but continues to have a steady upward trend.
The estimated spot price of ethylene is 985 USD/ton CFR China and 955 USD/ton CFR Southeast Asia on date 6 month 7, increase 25 USD/ton compared to last week. The estimated spot price of propylene is 1015 USD/ton CFR China and 985 USD/ton CFR Southeast Asia, increase 15 USD/ton compared to last week.
The price increase is likely to slow down
The crude oil market remains volatile
After oil prices increased further 45% in the first six months of the year 2021, Oil prices have been more volatile due to uncertainty about OPEC+ output plans. Market participants commented despite growing optimism about vaccination rollouts globally and in Asia., But Delta and other variants are increasing the number of coronavirus cases globally and this will limit the demand recovery..
Olefins face oversupply
South Korea's GS Caltex started up its new hybrid cracker plant around the date 18 month 6, But technical problems have prevented this cracker plant from operating at full capacity since the beginning of the month 7. This factory produces 750.000 tons of ethylene/year and 430.000 tons of propylene/year.
LG Chemical also achieved the standard output of 800.000 tons of ethylene/year at the naphtha cracker plant in Yeosu on date 11 month 6. This cracker factory also produces 400.000 tons of propylene/year. Production has been ramped up to 100% capacity since the beginning of the month 7.
Is the main importer of ethylene and propylene, China will add more 8 ethylene cracker plant in 2021, with a total ethylene capacity of 7,8 million tons. This will increase China's ethylene capacity to approx 40 million tons by the end of this year, equivalent estimated increase 23% compared to year 2020.
For propylene, China's Fujian Meide Petrochemical has started up the PDH plant 660.000 tons/new year in Fuzhou, Fujian at the beginning of the month 2. Oriental Energy has started the second phase of the PDH plant 660.000 tons/year in Ningbo at the end of the month 2, increase total propylene capacity 1,86 million tons/year. In 2021, China will add more 4 Other PDH plants and all 6 The new PDH plant contributes a total additional capacity of approx 3,25 million tons.
Ethylene and propylene in Asia still have a contango trend
Traders reported deals in the first half and most deals in the second half of the month 8 was signed for more than that 970-985 USD/ton ethylene CFR Northeast Asia and 1000-1015 USD/ton propylene CFR Northeast Asia. CFR Southeast Asia commodities traded lower 30-40 USD/ton compared to Northeast Asia prices.
Maintenance plans for the quarter 3 in Southeast Asia, East-West price differentials drive prices
Asian propylene prices continue to be driven by price differentials from Asia to Europe. So far, about 45.000 arrive 50.000 tons of propylene were shipped from Korea, Southeast Asia and China. This week, Market participants have heard that a new company, Chinese LPG trader, Baker Oil has moved 4000 tons of propylene to Europe. This caused a stir because Chinese refrigerated products have not been shipped out of China. Meanwhile, Traders and suppliers are still negotiating additional shipments that will likely be shipped next month 8.
However, for ethylene, There will be fewer ocean shipments, US/Brazilian exports arrive in Asia due to rising US Gulf prices. With a docking cost of approx 1100 USD/ton CFR Asia, This level has become difficult to reach even for forward buyers, traders said. Meanwhile, about 27.000 arrive 35.000 Previously shipped ocean tons of ethylene will arrive in Asia this month 8.
A businessman said: "Besides, after planned cracker plant maintenance in Northeast Asia ended in the month 7 to the first half of the month 8, Southeast Asia will begin maintenance plans during the quarter 3. Ethylene and propylene production in Southeast Asia is estimated to decrease by approx 500.000 tons and 400.000 tons over a period of months 7 to month 9. This number accounts for approx 4% total olefin production in Southeast Asia. Potential olefin supply shortage during the quarter 3 will support good prices in Southeast Asia, and there will be few (if any) exports to China, This will indirectly support Northeast Asian olefin prices.”