Asia Propylene Prices Accelerate Higher on Rising Feedstocks and Strong Buying

Asian propylene prices extended their upward trend this week, supported by sharply higher crude and propane costs, tight regional supply and active trading demand. Spot prices strengthened across both Northeast and Southeast Asia as traders returned to the market to cover late-September and early-October requirements.

The stronger upstream environment provided additional support to market sentiment. November Brent futures climbed sharply amid renewed fighting between the US and Iran, with crude settling above $95/bbl on September 2. Iran also warned that regional energy exports could face disruptions beyond the Strait of Hormuz, raising concerns that other key maritime routes, including the Bab el-Mandeb Strait, could become more vulnerable and affect global oil and petrochemical shipments.

Asian feedstock markets moved higher alongside crude. Naphtha prices reached $858/ton CFR Japan on Wednesday, up 7.6% from $797/ton a week earlier. Propane prices also increased to $796/ton CFR Japan, representing a 7.4% rise from $741/ton the previous week.

A Western trader said market participants are becoming accustomed to significant price volatility, with crude moving from around $86/bbl to $96/bbl within a week. This has made forward propylene pricing increasingly difficult to predict, while the sharp market swings are creating a greater need for hedging.

Propylene Price Snapshot

CFR China

Price: $1,150/ton

Change: ▲ $30/ton

Bid Range: $1,120–1,140/ton

Offer Range: $1,180–1,250/ton

CFR Southeast Asia

Price: $1,140/ton

Change: ▲ $30/ton

Bid Range: $1,100–1,110/ton

Offer Range: $1,160–1,250/ton

Northeast Asia Prices Rise as Traders Cover September Shortfalls

Northeast Asian and Chinese propylene prices increased by $30/ton for the fourth consecutive week, as traders returned to the spot market to cover shortages for second-half September delivery. Relatively low domestic inventories in China also supported the market.

Buying interest strengthened from Monday, pushing offers from the mid-$1,100s/ton to above $1,200/ton CFR China. Bids also increased, moving from the high $1,000s/ton to the low $1,100s/ton for late-September delivery. Wanhua Chemical was reported to have secured another spot cargo at $1,140–1,150/ton CFR China for mid-September arrival.

As import offers moved above $1,200/ton CFR Northeast Asia, domestic Chinese propylene prices also advanced. Several Chinese traders were reported to have secured both domestic and imported cargoes. A South China trader was heard to have purchased material at $1,130–1,150/ton CFR China, while another transaction involving an East China trader was reported at $1,140–1,150/ton CFR China.

In Shandong, spot prices increased by CNY 50–100/ton to CNY 8,800–8,950/ton. Sinopec also raised its propylene price by CNY 100/ton to CNY 8,950/ton this week, while East China and Shandong prices recorded increases of around CNY 100–200/ton.

Offers for a combination of South Korean and ASEAN cargoes were indicated at $1,180–1,250/ton CFR Northeast Asia/China. Traders' fixed-price bids were heard at $1,120–1,150/ton CFR Northeast Asia/China, while formula-based bids were reported at premiums of $30–35/ton over Northeast Asia assessments on a CFR China main-port basis for September delivery.

China's PDH utilization rate declined slightly to 67% this week amid several plant turnarounds. Oriental Energy shut its 660,000 tons/year Ningbo PDH plant in mid-August, while Zhejiang Satellite Petrochemical also took its 450,000 tons/year PDH unit offline for maintenance around the same period. PDH utilization could recover next week as Wanhua Chemical and Liaoning Kingfa are expected to restart their units.

Propylene supply across Northeast Asia is expected to remain tight through September and into the fourth quarter, with several South Korean crackers scheduled for maintenance. LG Chemical plans to shut its 1.3 million tons/year cracker in mid-October for around 45 days, while KPIC is expected to take its 800,000 tons/year cracker offline around the same time for approximately 40 days. The KPIC cracker is currently operating at around 65%.

Japan is also facing constrained propylene availability because of reduced operating rates and RFCC maintenance. ENEOS restarted its Kawasaki cracker, which produces around 300,000 tons/year of propylene, only in late July, while Mitsubishi Chemical's Kashima cracker resumed operations in early August.

Southeast Asian Prices Follow Northeast Asia Higher

Southeast Asian propylene prices extended their gains for a fourth consecutive week, supported by stronger Northeast Asian prices, firm trading demand and declining spot availability. Prices rose another $30/ton this week, taking cumulative gains since late June to around $260/ton, or 30%.

Market sentiment remained bullish as participants focused on tightening regional supply and elevated feedstock costs. Renewed geopolitical tensions between the US and Iran have increased concerns about propane and naphtha availability and costs, while the latest rise in crude futures has reinforced expectations of continued feedstock pressure.

Traders said the shortage of spot cargoes across Southeast and Northeast Asia could continue to support propylene prices in the near term. However, the rapid rise in feedstock costs is increasingly putting pressure on downstream affordability and could eventually reduce demand.

A Singapore-based trader said sentiment remains bullish in both regions because of volatile crude and propane prices. However, downstream PP, acrylonitrile and cumene markets have not kept pace with the sharp rise in propylene prices, suggesting that demand could eventually weaken.

Southeast Asian cracker operating rates have remained reduced as producers balance feedstock security concerns with margin pressures. The latest rise in November Brent futures has also pushed Asian propane prices higher, with CFR Japan values reaching $796/ton.

In floating-price discussions, buying indications increased to premiums of $20–25/ton over CFR SEA assessments, while selling indications rose to premiums of $30–35/ton.

Regional supply in Southeast Asia is expected to remain constrained during September. Malaysia's PRefChem restarted its 1.29 million tons/year Pengerang cracker in mid-June but continues to operate at around 60–70%, according to traders. Rayong Olefins has kept its 900,000 tons/year Map Ta Phut cracker shut since early March, with a tentative restart expected in September.

Aster Chemicals & Energy continues to operate its 1.15 million tons/year Pulau Bukom cracker at around 50–60% following planned maintenance in August. PT Lotte Chemical Indonesia has reduced operating rates at its 1 million tons/year Cilegon cracker to around 50–55% because of feedstock concerns, while ExxonMobil's older 900,000 tons/year Jurong cracker has remained shut since March.

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