Propylene spot prices in Europe resist bearish expectation

0
227

Northwest European propylene spot prices have shown no decline in over a week, so far resisting bearish expectations amid a recovery in feedstock naphtha prices while a heavy cracker maintenance period draws to an end.

S&P Global Platts on Monday assessed polymer grade propylene (PGP) for delivery to Northwest in May at Eur871/ ($960/), unchanged since May 5.

The spot price of naphtha, the primary source for propylene production in Europe, has reversed a 4% fall inside this month to reach $442.5/mt Monday. That is up from $439/mt at the beginning of May.

“The [propylene] market has been very quiet with not too much trading,” a buyer said. “Everyone is in wait-and-see mode as the view ahead is uncertain.”

Article continues below Advertisement...

PGP’s current spot price at just 1% below May’s contract price indicates a balanced market, while larger discounts and premiums typically indicate length or lack of , respectively.

Currently, demand in Europe is subdued, with several crackers in Europe still undergoing maintenance in addition to a supply cut due to strike action at Total’s refinery and adjacent cracker at Feyzin, .

According to Platts data, the last cracker to return of five that had entered maintenance at the end of the first quarter or the beginning of the second, would be OMV’s 500,000 mt/year ethylene capacity cracker.

The OMV cracker entered a turnaround period mid- and was expected to last around six weeks.

The strike at Total’s Feyzin site was expected to continue until late this week, a labor union source told Platts Thursday following a staff meeting that afternoon.

Total confirmed operations at the 109,000 b/d refinery and 250,000 mt/year steam cracker had been halted due to the strike.

Most European refinery maintenance so far this year took place in the first quarter, with the second quarter seeing works diminishing ahead of the start of the driving season, which typically boosts demand for refinery products and thus production of co-product propylene.

As the return of propylene capacity arrives, prices are expected to eventually falter and lead to a lower contract price in , sources said.

Platts propylene indicator for June was assessed at Eur829/mt Monday, which is Eur51/mt less than the May contract price.

LEAVE A REPLY

Please enter your comment!
Please enter your name here