Asian Propylene Gives Up Early Gains as Weaker Energy Markets Weigh on Sentiment

Asian propylene prices retreated this week after briefly strengthening at the end of last week, as a sharp decline in crude oil and propane prices reversed earlier bullish momentum. Although tighter regional supply continued to provide support, softer energy markets and cautious buying prevented the market from sustaining its recent gains.

Improved expectations for a diplomatic resolution to tensions between the United States and Iran eased concerns over potential disruptions in the Strait of Hormuz, triggering a sharp fall in crude oil prices. October Brent futures dropped below $80/bbl, dragging naphtha and propane prices lower across Asia. The decline in feedstock costs quickly weighed on propylene values after a short-lived rally.

Asian Spot Propylene Prices

CFR China
Current Price: $1,020/ton
Weekly Change: ▼ $20/ton
Buyer Ideas: $950-980/ton
Seller Offers: $1,100-1,150/ton

CFR Southeast Asia
Current Price: $1,030/ton
Weekly Change: ▼ $20/ton
Buyer Ideas: $950-980/ton
Seller Offers: $1,100-1,150/ton

In Northeast Asia, buying interest had strengthened late last week as tighter domestic availability in China encouraged traders to secure August cargoes. Higher offers briefly lifted spot prices, but sentiment weakened at the start of the week as crude oil corrected and China's domestic propylene market softened. Spot values in East China and Shandong declined, while Sinopec reduced its propylene prices by CNY300/ton. September Zhengzhou propylene futures also posted a notable decline during the week.

Despite the correction, supply conditions remain relatively tight. China's PDH operating rates improved after several units resumed production, although South Korean producers continue to run at reduced rates because of feedstock uncertainty and fluctuating propane costs. Market participants noted that propane prices remain well above levels seen a few weeks ago, meaning production economics continue to support propylene prices.

In Southeast Asia, the market followed a similar pattern. Prices initially strengthened before retreating alongside falling oil and feedstock values. Even so, participants believe the downside remains limited as regional availability is constrained by lower cracker operating rates, maintenance shutdowns, and reduced inventories. Traders also pointed out that many companies still need to secure material to cover August contractual commitments, helping support spot demand.

Several production outages and reduced operating rates continue to tighten regional supply. Malaysia's PRefChem has restarted its cracker but continues to operate below full capacity, while Singapore's Aster Chemicals & Energy is preparing for scheduled maintenance this month. PT Lotte Chemical Indonesia has reduced operating rates because of feedstock concerns, and ExxonMobil's older Singapore cracker remains permanently shut. Thailand's Rayong Olefins cracker also remains offline, adding further support to the regional supply balance.

Although crude oil and feedstock markets have turned weaker, industry participants believe supply constraints and ongoing procurement requirements for August will help prevent a sharper decline in Asian propylene prices unless energy markets weaken further.

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