Asia Propylene: Prices rally further as oil surge, feedstock fears fuel bullish sentiment

Asian propylene prices extended their upward momentum for a second straight week as rising crude oil prices and growing concerns over feedstock availability continued to strengthen market sentiment. The renewed geopolitical tensions in the Middle East have added fresh uncertainty to energy markets, while stronger futures and higher production costs encouraged suppliers across Asia to raise offers.

China's September propylene futures also moved higher, reinforcing bullish expectations throughout the region. Spot offers increased sharply, although buyers remained cautious and continued placing bids well below sellers' expectations, resulting in a wider bid-offer gap and limited spot transactions.

Higher crude oil prices also supported gains in ethylene, reducing the price gap between the two olefins. While supply in Southeast Asia improved slightly following several plant restarts, availability in Northeast Asia remained relatively tight due to reduced operating rates at several crackers and PDH units.

Regional Price Overview

CFR China

Latest Price: $980/ton
Weekly Change: ▲ $65/ton
Bid Range: $950–960/ton
Offer Range: $1,050–1,100/ton

CFR Southeast Asia

Latest Price: $960/ton
Weekly Change: ▲ $60/ton
Bid Range: $930–940/ton
Offer Range: $1,050–1,100/ton

Northeast Asia leads the rally

Propylene prices in Northeast Asia climbed sharply as higher crude oil, stronger propane values, and firmer domestic Chinese prices lifted market sentiment. Chinese producers significantly increased spot offers, with some export quotations reaching around $1,100/ton FOB, reflecting expectations of tighter supply and rising production costs.

Domestic prices in China also strengthened, supported by higher futures and multiple producer price increases. However, buyers continued to focus mainly on domestic procurement while remaining cautious about paying sharply higher import prices.

Although several Chinese PDH units restarted operations in recent weeks, supply across Northeast Asia remained relatively limited due to lower operating rates in South Korea and maintenance shutdowns in Japan.

Southeast Asia follows higher production costs

Propylene prices in Southeast Asia also moved higher during the week, tracking gains in China and the broader energy complex. The latest increase has largely reversed the prolonged decline that had persisted since early April.

Despite additional spot availability following plant restarts, suppliers maintained a firmer pricing stance as rising crude oil, naphtha, and propane costs significantly increased production expenses.

Market participants noted that propane prices have risen sharply, making PDH production considerably more expensive and supporting higher propylene offers across the region.

Supply improves, but uncertainty remains

Several Southeast Asian producers have resumed operations, resulting in a modest improvement in regional supply. However, ongoing outages at other major facilities continue to prevent a significant increase in overall availability.

Industry participants believe suppliers will remain cautious about releasing additional spot cargoes as long as uncertainty surrounding Middle East tensions continues. At the same time, buyers remain hesitant to chase rapidly rising prices due to concerns about weak downstream demand.

The recent rally has narrowed the premium of propylene over ethylene considerably, highlighting that both markets are now being driven primarily by higher energy and feedstock costs.

Looking ahead, market direction is expected to depend on developments in crude oil prices, feedstock availability, and geopolitical conditions. While stronger production costs are supporting prices, sustained gains will likely require firmer downstream demand.

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