Petronas polymer delay boosts southeast Asian PP prices

An expected delay to Malaysian state-owned refiner Petronas' new 900,000 t/yr polypropylene (PP) unit is likely to support southeast Asian prices in April and May.

The explosion at the 140,000 b/d atmospheric residue desulphurisation unit at Petronas' Pengerang Integrated Complex (PIC) on 12 April is likely to delay on-specification polymer production.

PP prices firmed $20-30/t on the prospect of the delayed start-up. Raffia homopolymer traded at $1,140-1,160/t cfr southeast Asia and $1,110-1,140/t cfr China this week, according to Argus data.

The PP plant, with sizeable capacity, was initially expected to start supplying the market before the Muslim fasting month of Ramadan begins in early May, when operations in Malaysia are expected to slow down.

Major traders now expect polymer operations to hit full or near-full capacity in the third quarter or early fourth quarter this year.

Petronas is still expected to gradually ramp up test runs at its PP facility and may feed the plant with propylene sourced regionally.

Southeast Asian producers are expected to buy more supplies from the Middle East to meet the shortfall.

The Petronas delay adds to price hikes this year, most of which have been supply-led.

Asia-Pacific producers are planning a spate of shutdowns later in April and in May. India's Mangalore Refinery and Petrochemicals (MRPL) will shut its 440,000t/y PP plant for a scheduled turnaround this week. The planned shutdown is expected to last for around 45 days.

China, Asia's main import market, has three major scheduled shutdowns in the next few weeks, at Sinopec Luoyang, Zhongjing and Shenhua Ningxia. The affected units have a combined capacity of 1.92m t/y and the shutdowns are expected to tighten supply significantly.

PP demand in key southeast Asian hubs such as Thailand, Vietnam and Indonesia remains sluggish because of weak demand in the packaging and agri sectors.