Demand for the downstream of propylene in China is weakening
Demand for the downstream of propylene in China is weakening
The planned parking overhaul between may and August of northeast Asia will reduce supply and provide support for prices in the short term, while the downstream polypropylene (PP) market will also affect the direction of the price of propylene. Given that China's downstream market is expected to be bearish, Asian propylene (C3) spot prices will not rise significantly in the second half of 2017, but still get support from the supply side. The demand for propylene in the downstream PP area of the key Chinese market is expected to be weak, while the reduction in the number of planned maintenance in the second half of the year may also keep the supply situation in the short term. Meanwhile, the demand for another derivative of the derivative of epoxy propane (PO) in China will also be expected to be soft. Another major downstream market, acrylic, will continue to struggle in an oversupplied environment. China is a major importer of propylene in Asia, and its domestic market generally determines the trend of spot prices in northeast Asia. China's imports of propylene have been shrinking since the start of the year. Data showed China imported 217,000 tonnes of propylene in April, down from 1.18 million tonnes in January. Other parts of northeast Asia, such as Japan, South Korea and Taiwan, also have relatively fixed demand. Spot prices in northeast Asia have fallen 7.3 per cent from the start of the year to $830 a tonne on June 9. Markets in northeast and southeast Asia have been very strong at the beginning of the year. Last April, the price of propylene in southeast Asia was higher than in northeast Asia for the first time, mainly due to good performance. This year it has been going on for two months since January 13, and southeast Asian buyers say it is hard to buy them at the start of the year, causing higher bids and buying signs. But the key Chinese market demand began to soften in the second half of February, mainly because of the poor performance of the downstream PP market, dragging down the spot price of propylene in southeast Asia. Since early march, the price of northeast Asia has returned to a higher level compared with southeast Asia. Prices in northeast Asia fell 17.8 percent in the second half of February to the second half of April, driven mainly by the huge decline in China's domestic market. In the same period, the price of propylene in southeast Asia was down 29.6 per cent, while shandong prices in China fell 18.8 per cent. The supply side of China is oversupplied. But in April the Chinese government launched an environmental inspection to weaken demand from downstream factories in eastern shandong province. During the same period, the sales volume of key pp downstream markets continued to be unsatisfactory and the inventory increased, which brought greater sales pressure for propylene production in China. A small rebound in China and Asia at the beginning of may has given producers a pause, but the dismal demand for many downstream markets will continue to hurt the market.
