Tight supply is to support the Asian propylene market amid soft demand

The Asian propylene market rebounded slightly on Monday, 18 February after a cold start in the previous week. This could be a signal of a recovering market as regional supply curtailed ahead of the heavy maintenance season. 

There are at least eight major propylene makers in Asia are conducting maintenance work in the first quarter of the year, cutting out about 290,000 tons of supply from the system. The following table detailed out the maintenance schedule at these plants:

However, market players are not expecting propylene prices to surge drastically in the immediate term, as demand from the downstream PP market remains soft in China. In fact, domestic PP market in China is now facing bloated supply condition following the long Lunar New Year break. As of 18 February 2019, total PP and PE inventories at Sinopec and CNPC’s warehouses surged to 1.115 million tons. As a result, spot homo-PP yarn based on EXW China term has declined nearly CNY294/ton ($43/ton) compared to the week before the holiday. 

“Market sentiment might improve in the coming week once more converters return to work. Quicker digestion in local inventories also means that PP plant would need to increase operation rate. At the moment, many PP producers refrain from procuring new propylene cargoes,” a market source said.