The FOB Korea marker in the propylene market hit a 22-month high Thursday, as the marker was assessed at $1,000/mt.
The last time the marker was at this level was in May 2015.
From the start of 2017, the FOB Korea marker has soared 16.28% from $860/mt on January 3. Over the same period, the CFR China marker has also rallied 13.3%, to reach $1,020/mt Thursday.
Propylene exports from South Korea in 2016 had surged 76.6% year on year to 156,398 mt, according to the South Korean Customs and Trade Development Institute.
China imports in 2016 rose 4.7% year on year to 2,902,919 mt, according to statistics from the China Customs Statistical Information Center.
The benchmark CFR Japan naphtha price also hit a 19-month high at $528.625/mt Monday, amid growing demand from the petrochemical sector on the back of stronger margins, S&P Global Platts data showed. Naphtha is a key feedstock for propylene.
The hike in prices was driven by a shortage in supply from key producers in Northeast Asia.
February typically sees lesser production than the other longer months. Moreover, contractual term obligations and healthy domestic demand from the usual producers such as Japan and Korea have reduced the available volumes of spot cargoes.
However, the most important factor was the key plants were having turnarounds at around the same time.
Taiwan’s CPC shut its No. 6 naphtha-fed steam cracker at Linyuan February 15, and the turnaround is expected to last about 56 days.
The cracker, expected to restart April 12, can produce 430,000 mt/year of propylene. Formosa is expected to do partial turnaround from March to April at its 84,000b/d residue fluid catalytic cracker.
On January 19, Japan’s JX Nippon Oil and Energy shut its RFCC in Sendai, Japan, owing to technical issues. However, the plant is expected to restart shortly.
JX Nippon will shut the RFCC at its Osaka refinery for scheduled maintenance from around mid-March to mid-April. The RFCC is capable of producing 70,000 mt/year of propylene.
In Southeast Asia, Thailand’s IRPC shut its steam cracker and olefins conversion unit in Rayong February 1.
The shutdown is expected to last around 45 days, although there is no confirmation as yet on the restart date.
The combined production capacity of the units is approximately 400,000 mt/yr of propylene, Platts had reported earlier.
“The sport market is very tight, and no cargoes seem available,” said a regional source.
