The Urethane Blog

Propylene Expected to Fall in Europe

US propylene imports slow on bearish sentiment for July: market sources


London (Platts)–12Jun2015/902 am EDT/1302 GMT



European imports of propylene from the US Gulf are expected to lessen in July following bearish propylene price expectations.

"The arbitrage is quite slim considering we expect falls in July," a buyer said.

Polymergrade spot prices in Europe were assessed at $1,176/mt CIF NWE, Thursday, falling $25/mt on day. Prices in the US were last assessed at 37 cents/lb FD USG equivalent to $816/mt. Trade and shipping sources pegged freight at $210-220/mt.

"We are seeing a reduction in imports and not because of a lack of vessels available but because there are not too many takers," a trade source said.

Only one new US fixture to NWE had been heard by Platts since bearish sentiment began to gain ground in the first week of June. This was for around 5,000 mt of product loading in the middle of June.

Six US propylene shipments, totalling around 30,000 mt, had been heard fixed to Europe at the end of May with the price spread between both continents at similar levels to today's.

The bearish sentiment has been growing as olefin supply is expected to return through June.

Hungarian petrochemical company TVK's Olefin-2 steam cracker had restarted this week, sources said Thursday. And Versalis' 440,000 mt/year Brindisi, Italy, cracker, BP Refining and Petrochemicals' Olefins-3 cracker in Gelsenkirchen, Germany and the NaphthaChimie cracker in Lavera, France, are all expected to restart the end of June: in total these three crackers make up around 6.7% of European capacity.

In the first half of July Shell is expected to have product available from its steam cracker in Moerdijk, in the Netherlands, the company previously said. Shell's cracker at the site has the capacity to produce 900,000 mt/year of ethylene, making it one of the largest crackers in Europe.

Meanwhile, Shell's 2A Wesseling cracker, which has an ethylene capacity of 299,000 mt/year, was not expected to be operational again before September, industry sources said. Shell declined to comment on timing.