Pricing and 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 9, 2021
BASF Increasing TPU Prices
BASF to increase prices for thermoplastic polyurethane systems in North America
WYANDOTTE, MI, October 5, 2021 – BASF will increase prices for all thermoplastic polyurethane (TPU) products in North America by $0.55/lb for orders shipping on or after October 15, 2021, or as contracts allow.
October 9, 2021
BASF Increasing TPU Prices
BASF to increase prices for thermoplastic polyurethane systems in North America
WYANDOTTE, MI, October 5, 2021 – BASF will increase prices for all thermoplastic polyurethane (TPU) products in North America by $0.55/lb for orders shipping on or after October 15, 2021, or as contracts allow.
October 9, 2021
Natural Gas as Related to MDI
Johan, CC BY-SA 3.0 Natural gas prices are being passed to MDI American chemicals producer, Huntsman, has announced that it will be increasing the price of its methylene diphenyl diisocyanate (MDI) due to high natural gas prices.
Breaking it down:
Remember last time when we talked about Yara’s response to rising natural gas prices? Yara decided to cut back its ammonia production by 40% instead of passing the additional production cost down the value chain. Huntsman made the call to add a surcharge of €125 (which is roughly a 10% price increase) to its MDI production.
The decision to cut production or increase prices has to do with current storage levels and whether the end market is willing to pay the price. Ammonia is used to make fertilizers and MDI is used to make polyurethanes. Apparently, polyurethane consumers can eat the margin.
Wait, natural gas prices are high?
Take a look at the price at the top of the newsletter (HH stands for Henry Hub—a nickname owed to pipeline nexus in Louisiana). It’s twice as high as normal here in the US, but even higher in regions that rely on oil & gas imports (cough cough Europe). Give Wednesday’s newsletter a read if you’re interested in what’s causing the spike.
Read the press release here.
October 9, 2021
Natural Gas as Related to MDI
Johan, CC BY-SA 3.0 Natural gas prices are being passed to MDI American chemicals producer, Huntsman, has announced that it will be increasing the price of its methylene diphenyl diisocyanate (MDI) due to high natural gas prices.
Breaking it down:
Remember last time when we talked about Yara’s response to rising natural gas prices? Yara decided to cut back its ammonia production by 40% instead of passing the additional production cost down the value chain. Huntsman made the call to add a surcharge of €125 (which is roughly a 10% price increase) to its MDI production.
The decision to cut production or increase prices has to do with current storage levels and whether the end market is willing to pay the price. Ammonia is used to make fertilizers and MDI is used to make polyurethanes. Apparently, polyurethane consumers can eat the margin.
Wait, natural gas prices are high?
Take a look at the price at the top of the newsletter (HH stands for Henry Hub—a nickname owed to pipeline nexus in Louisiana). It’s twice as high as normal here in the US, but even higher in regions that rely on oil & gas imports (cough cough Europe). Give Wednesday’s newsletter a read if you’re interested in what’s causing the spike.
Read the press release here.
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