Higher US prices, arbitrage lifts Asian propylene

: Petrochemicals
21/02/04

Rising US propylene prices have prompted more discussions to ship Asia-origin supplies to the US because of the lucrative arbitrage, pushing fob northeast Asia values to near a 2½-year high.

Asian sellers are aiming to sell more propylene to the US with the viable inter-regional arbitrage, with US propylene prices hitting a seven-year high this week at $1,874/t because of a supply shortage and robust downstream demand.

Sellers, particularly those in China, are targeting to offer propylene cargoes with selling ideas at $1,200/t fob China. China exported its first ever propylene cargo towards Europe and the Americas in mid-January when the arbitrage from Asia opened up. Argus assessed fob northeast Asia propylene prices at $1,090-1,150/t yesterday, the highest level since October 2018.

Such discussions and trade flows are likely to persist for at least a month given the tight supplies in the US, which will probably ease off in March. US producer Enterprise's 750,000 t/yr propane dehydrogenation unit in Texas is looking to restart six weeks later after it shut on 2 February.

An oversupply situation in China, together with cheaper domestic prices with slower demand ahead of the lunar new year holidays starting next week, have led to subdued discussions in the cfr China market. Cfr northeast Asia prices have been trending downwards, hitting a one-month low yesterday at $930-980/t. The difference between cfr northeast Asia and fob northeast Asia widened further to a negative $165/t this week, a level not seen since assessments started in 2003, down by $120/t compared with last week.

By Toong Shien Lee

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