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Propylene market in Asia has been following the softening trend since beginning of November on the back of bloated inventories. Compared to late October 2017, propylene based on FOB South Korea has fallen approximate $65/ton to $875/ton on 10 November – the lowest level since 30 August.

Such rapid price deterioration is blamed to the fact that bad weather condition prevents smooth trans-shipment of propylene vessels, causing a build up in inventories at South Korea producer’s warehouses. Industry sources said, “We heard it is becoming more difficult to secure vessels these days as many are stuck at North China port due to unfavourable weather condition. South Korean suppliers might have to concede to additional discounts in the near term in order to speed sales process to secure earlier vessels.”

Players in the PP market therefore started feeling bearish about the near term market outlook knowing that the general availability across Asia remains relatively tight. A Vietnamese buyer purchased 1000 tons of Saudi Arabia homo-PP at $1140/ton CIF, LC AS term in the previous week said, “We are waiting on the side-line at the moment. It is very likely that import PP prices might witness additional reduction given the current upstream condition. We might restock again if market draws nearer to the $1100/ton mark.”

Cautious traders, who have made small replenishment in the previous week, adopted similar stance on the first trading day of the week. “Tight supply might no longer be able to hold the market, especially when producers wish to reduce year-end stock. It is better to be cautious though energy complex remains firm,” a regional trader added.

Downstream PP market has marginally softened in recent days, and this could possibly induce more downward pressure on propylene costs. A market participant commented, “At the meantime, we do not expect the downtrend to persist too long as Japanese crackers are entering the maintenance shutdown season during quarter 1 next year, which might tighten the supply to a certain extent.”