Asia Propylene Prices Climb as Crude Rally Meets Tight August Supply

Asian propylene prices moved higher this week as a sharp rise in crude oil and propane prices combined with tighter August availability. While volatile energy markets kept many end users cautious, major traders with contractual shortages were forced to secure spot cargoes, adding further support to prices.

Crude oil surged after US-Iran peace talks stalled again, with disagreements over compensation and sanctions continuing to delay progress on reopening the Strait of Hormuz. October Brent crude futures settled at $88.98/bbl on Wednesday.

The rally in crude also pushed Asian feedstock prices higher. Naphtha jumped by $48/ton to $809/ton CFR Japan on Tuesday, up nearly 7% from $761/ton last Friday. Propane prices also increased to $719/ton CFR Japan, compared with $694/ton last Friday.

Despite the stronger cost environment, most end users remained cautious and avoided aggressive spot purchases due to sharp fluctuations in crude and naphtha. However, major traders facing August contractual shortfalls continued buying as they needed to secure material, helping lift the spot market.

Propylene Price Snapshot

CFR China
Latest Price: $1,080/ton
Weekly Change: ▲ $40/ton
Bid Range: $1,050-1,070/ton
Offer Range: $1,150-1,200/ton

CFR Southeast Asia
Latest Price: $1,090/ton
Weekly Change: ▲ $40/ton
Bid Range: $1,050-1,070/ton
Offer Range: $1,150-1,200/ton

Northeast Asia Prices Gain on Spot Buying

Propylene prices in Northeast Asia and China strengthened toward the end of last week as Chinese domestic inventories declined and traders continued purchasing cargoes to cover August requirements.

Stronger crude, rising propane costs and firmer domestic propylene prices pushed prompt August offers to around $1,150-1,200/ton CFR China. A Shandong-based trader was reported to have purchased a cargo at $1,070-1,080/ton CFR East China for mid-August arrival. Buying interest was also heard around $1,080-1,090/ton CFR Yantai for August delivery.

By Monday, the market strengthened further alongside higher October crude futures and rising domestic Chinese prices. Offers reached $1,120-1,130/ton CFR China main ports, while bids moved up to $1,040-1,050/ton CFR East China. Another deal was heard around $1,080-1,090/ton CFR East China for August delivery.

Offers for mixed South Korean and ASEAN cargoes were indicated at $1,150-1,200/ton CFR Northeast Asia/China, while bids were heard at $1,050-1,080/ton. Formula-based buying ideas were also reported at premiums of $10-15/ton over Northeast Asia assessments.

China’s domestic propylene market also rose sharply. Shandong prices increased by CNY450-600/ton to CNY8,500-8,600/ton, while September Zhengzhou propylene futures jumped CNY409/ton ($61/ton) on Tuesday to settle at CNY7,903/ton. Sinopec also raised its propylene prices by CNY300/ton to CNY8,500/ton.

China’s PDH utilisation remained around 69% following several plant restarts. Quanzhou Grand Pacific resumed its 660,000 tons/year PDH unit in late July, while Wanhua Petrochemical plans to restart its 900,000 tons/year No. 2 PDH plant in mid-August.

Despite these restarts, Northeast Asian supply remains relatively tight. South Korean and Japanese PDH plants are continuing to operate at lower rates amid concerns over feedstock security and broader industry rationalisation.

Southeast Asia Prices Follow the Upward Trend

Propylene prices in Southeast Asia also increased by around $40/ton from late last week, supported by the rally in crude oil and higher propane costs.

Tighter August supply has provided additional support, as reduced operating rates at crackers and PDH plants, along with extended maintenance shutdowns, have restricted spot availability. Japanese traders covering part of their August shortages also added buying support to the market.

The rise in propane prices has improved the economics of PDH production compared with steam cracking. At current prices, propylene values in Northeast and Southeast Asia remain above estimated PDH production breakeven levels, which could encourage higher operating rates at PDH plants.

Meanwhile, ethylene production margins remain negative, reducing the incentive for producers to increase steam cracker operating rates.

Supply across Southeast Asia is also expected to remain tight during August. PRefChem’s 1.29 million tons/year Pengerang cracker is operating at around 60-70% after two RFCC units restarted at the end of July. Rayong Olefins' 900,000 tons/year Map Ta Phut cracker has remained shut since early March, with a tentative restart planned for September.

Aster Chemicals & Energy continues to run its 1.15 million tons/year Pulau Bukom cracker at around 50-60% and is scheduled for a one-month maintenance shutdown in August. PT Lotte Chemical Indonesia has reduced rates at its 1 million tons/year Cilegon cracker to approximately 50-55% because of feedstock concerns, while ExxonMobil’s older 900,000 tons/year Jurong cracker has remained offline since March.

With crude and feedstock prices remaining elevated and August supply constrained, Asian propylene prices are likely to stay supported. However, cautious end-user demand and continued volatility in energy markets could limit the extent of further gains.

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