Asian Markets
October 13, 2021
Propylene Naptha Spread in Asia
Asia’s propylene-naphtha spread touches near six-week high on stronger propylene
Propylene-naphtha spread at $332.75/mt
FOB Korea propylene at four-month high of $1,105/mt
Asia’s propylene-naphtha spread touched a near six-week high Oct. 12 as China’s mandated curbs on power consumption lifted domestic propylene prices, while benchmark C+F Japan naphtha saw volatility in crude markers as prices dipped day on day.
The spread between FOB Korea propylene and C+F Japan naphtha cargo rose 44% on the week to $332.75/mt at the Asian close Oct. 12, Platts data showed. The spread was last higher Sept. 2 at $337/mt, S&P Global Platts data showed. This is above the typical breakeven spread of $250/mt.
China’s mandated dual control on power consumption and production boosted domestic propylene prices over the weekend as buyers raised their inventory anticipating a supply shortage.
Firmer crude oil and other propylene-making feedstock aided the spot market.
The East China propylene price rose Yuan 1,100/mt from Oct. 7 to Yuan 9,000/mt ex tank price Oct. 12 , while the Shandong propylene price rose Yuan 1,600/mt to Yuan 9,700/mt ex tank price over the same period.
Chinese industry sources said that the government continued to be strict on its double control policy and there was little leeway for propylene producers to increase their run rates after the National Day holidays, as the country still faced lack of coal and other energy resources, Platts reported earlier.
“Many provinces face power cuts, and many propylene productions units are operating on reduced run rates, but the demand for propylene is still there because downstream polypropylene demand, buoyed by strong PP futures, is gaining traction and now there is a shortage of propylene,” said a China-based trader.
FOB Korea propylene rose $130/mt week on week to $1,105/mt Oct. 12, Platts data showed.
Meanwhile, the olefin producers’ margin for ethylene production was weak, as it narrowed $3.375/mt week on week and $18.625/mt month on month to $387.75/mt at the Asian close Oct. 12. This remained above the breakeven level of $350/mt for non-integrated producers and is likely to support the high cracker run rates, market sources said.
Volatility in crude markers saw benchmark C+F Japan naphtha fall $1.125/mt day on day but rise $28.375/mt week on week to $772.25/mt at the Asian close Oct. 12, Platts data showed. The mixed picture was also reflected as the CFR Japan naphtha physical crack against front-month ICE Brent crude futures narrowed $0.975/mt day on day, but rose $12.025/mt week on week to $142.475/mt at the Asian close Oct. 12, Platts data showed.
Cracker feedstock demand for naphtha was also tepid as prices of LPG eased on the day. This narrowed the propane-naphtha spread $10.375/mt on the day and $54.875/mt on the week to $99.75/mt at the Asian close Oct. 12, Platts data showed. LPG typically becomes economically viable as a steam cracking feedstock when its price is 90% that of naphtha, or lower.
October 8, 2021
Energy Price Increases Hit Korea
Soaring LPG prices rapidly deteriorate Korean petrochem makers’ profitability
 |
| [Photo by Kim Ho-young] |
| <이미지를 클릭하시면 크게 보실 수 있습니다> |
A sharp surge in liquefied petroleum gas (LPG) prices driven by a surge in oil prices is threatening the profitability of South Korean petrochemical companies that heavily relay on propane to produce plastic materials.
According to industry sources on Tuesday, LPG prices soared nearly 30 percent in seven months from over $500 per ton in March to over $800 in September. The higher crude oil prices have led to a jump in LPG prices given that LPG is produced in the process of refining crude oil. The recent hike, however, is seen as excessive, sources say.
The anticipated higher demand for heating during the upcoming winter season should hike LPG prices further, industry observers concerned.
With the surge in LPG prices, Korean petrochemical companies are rapidly losing profit because they rely on import propane to make and sell plastic products.
Removing hydrogen from LPG-categorized propane creates propylene, which is a feedstock to make plastics. Petrochemical companies usually produced naphtha from crude oil before changing it to propylene but because the abundant supply of U.S. Shale gas had helped significantly lower LPG prices, producing propylene using propane began to generate more profit.
In recent years, major Korean petrochemical players such as Lotte Chemical, LG Chem, and Hanwha Total, expanded facility that produces propylene using propane. With the surge in LPG prices, however, the companies started losing price competitiveness.
Industry sources noted that in general, producing propylene using LPG creates more profit when LPG price per ton falls to below 90 percent of naphtha.
Until last year, LPG prices were kept low, leading many petrochemical companies to rush to ramp up propylene production using LPG instead of naphtha. But tith LPG prices hitting multi-year highs near naphtha prices, local petrochemical players are under mounting pressure to change their feedstock diversification strategies.
October 8, 2021
Energy Price Increases Hit Korea
Soaring LPG prices rapidly deteriorate Korean petrochem makers’ profitability
|
| [Photo by Kim Ho-young] |
| <이미지를 클릭하시면 크게 보실 수 있습니다> |
A sharp surge in liquefied petroleum gas (LPG) prices driven by a surge in oil prices is threatening the profitability of South Korean petrochemical companies that heavily relay on propane to produce plastic materials.
According to industry sources on Tuesday, LPG prices soared nearly 30 percent in seven months from over $500 per ton in March to over $800 in September. The higher crude oil prices have led to a jump in LPG prices given that LPG is produced in the process of refining crude oil. The recent hike, however, is seen as excessive, sources say.
The anticipated higher demand for heating during the upcoming winter season should hike LPG prices further, industry observers concerned.
With the surge in LPG prices, Korean petrochemical companies are rapidly losing profit because they rely on import propane to make and sell plastic products.
Removing hydrogen from LPG-categorized propane creates propylene, which is a feedstock to make plastics. Petrochemical companies usually produced naphtha from crude oil before changing it to propylene but because the abundant supply of U.S. Shale gas had helped significantly lower LPG prices, producing propylene using propane began to generate more profit.
In recent years, major Korean petrochemical players such as Lotte Chemical, LG Chem, and Hanwha Total, expanded facility that produces propylene using propane. With the surge in LPG prices, however, the companies started losing price competitiveness.
Industry sources noted that in general, producing propylene using LPG creates more profit when LPG price per ton falls to below 90 percent of naphtha.
Until last year, LPG prices were kept low, leading many petrochemical companies to rush to ramp up propylene production using LPG instead of naphtha. But tith LPG prices hitting multi-year highs near naphtha prices, local petrochemical players are under mounting pressure to change their feedstock diversification strategies.
October 8, 2021
Chinese Adipic Acid Podcast
Asia ADA markets face supply uncertainty amid China’s dual control policy
Author: Jasmine Khoo
2021/10/07
SINGAPORE (ICIS)–Asia’s adipic acid (ADA) markets face supply uncertainty amid operating rate cuts in China due to the dual control policy. Volatility in the feedstock benzene markets has also put pressure on ADA production. Firm pricing in the related methylene diphenyl diisocyanate (MDI) markets has also dented ADA buyers’ confidence. In the seasonal downstream lull, buyers have also remained on the sidelines due to a lack of buying urgency.
- Feedstock benzene exerts pressure on ADA amid gains
- Seasonal lull plagued cargo uptake in Asia in Q3
- Asia MDI supply snug on planned maintenance
In this podcast, Jasmine Khoo speaks with editor Zhi Xuan Ho about recent developments in the Asian ADA market.
October 8, 2021
Chinese Adipic Acid Podcast
Asia ADA markets face supply uncertainty amid China’s dual control policy
Author: Jasmine Khoo
2021/10/07
SINGAPORE (ICIS)–Asia’s adipic acid (ADA) markets face supply uncertainty amid operating rate cuts in China due to the dual control policy. Volatility in the feedstock benzene markets has also put pressure on ADA production. Firm pricing in the related methylene diphenyl diisocyanate (MDI) markets has also dented ADA buyers’ confidence. In the seasonal downstream lull, buyers have also remained on the sidelines due to a lack of buying urgency.
- Feedstock benzene exerts pressure on ADA amid gains
- Seasonal lull plagued cargo uptake in Asia in Q3
- Asia MDI supply snug on planned maintenance
In this podcast, Jasmine Khoo speaks with editor Zhi Xuan Ho about recent developments in the Asian ADA market.
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