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Propylene Pricing Overview

Market Overview

Asia

Propylene supply across Asia was observed getting tighter by the end of the Q3 withprice discussions gradually picking up particularly in northeast Asia. Various plannedand unplanned outages affected the functioning of fluid catalytic cracking (FCC) andsteam cracking Naphtha units in Japan. Strong domestic demand in South Korearestricted the cargo availability for exports. Demand in China was more or less stablewith buyers indicating the commissioning of two Propane Dehydrogenation (PDH)units in July possessing a total nameplate capacity of 1050 KTPA. FormosaPetrochemical Corporation (FPCC) announced maintenance shutdown of its No. 3cracker located in Taiwan on August 11 for nearly 1.5 months. The cracker hasPropylene production capacity of 600 KTPA. In addition, Yeochun NCC (YNCC) and SKGlobal Chemical were heard starting turnarounds for their crackers from August toOctober. With producers highlighting tight regional supply, CFR China Propyleneprices were assessed at the USD 900 per tonne levels in mid-September. Demand forPropylene Derivatives was seen gaining strength by the end of into Q3.

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Europe

The third quarter Propylene prices were settled at a narrow range with the demandoutlook largely mixed-to-low owing to fragile economic conditions. Promptavailability of the product was affected largely by unexpected cracker turnarounds inearly-August which were resolved by the first half of September. The ongoing outageat Borealis’ Stenungsund, Sweden cracker further exacerbated the shortness inproduct availability. The pricing graph last showed an upward trajectory in July whenit was assessed around USD 780 per tonne FD NWE and then gradually tapered offby the end of the quarter. While refineries continued to run at reduced rates,primary driver Naphtha was on a slightly lower edge in August compared to July.Some players reported lackluster demand for Propylene derivatives while otherssurging Polypropylene consumption as the sweet spot.

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Propylene Pricing Overview

North America

Regional Propylene supply was affected by the prolonged shutdown of BASF Total’sPort Arthur cracker in Texas cracker. Hit by the pandemic-induced slowdown, theAmerica’s combined refinery run rate was maintained around 75-80 pc due todepressed gasoline demand, further limiting the Propylene production. Series offorce majeures declared due to hurricane Laura led to temporary disruption in theregional supply. US Gulf Propylene prices showed an uptick amid production issuesand prospects turning positive as manufacturing activity gradually picked up duringthe quarter. The US DEL (delivered) Polymer-Grade Propylene (PGP) contract priceswere settled at one-year high to around USD 715 per tonne and Chemical-GradePropylene (CGP) was assessed at USD 683 per tonne in July.

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chemical and petrochemical business globally and enables the decision-

maker to make smart choices. It identifies and analyses factors such as

geopolitical risks, environmental risks, raw material availability, supply chain

functionality, disruption in technology and so on. It targets market volatility

and ensures clients navigate through challenges and pitfalls in an efficient

and agile manner. Timeliness and accuracy of data has been the core

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in tuning in to the real-time data points to execute multi-billion-dollar projectsglobally.

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Propylene Pricing Overview

Methodology

ChemAnalyst gathers information through primary research surveys conducted withvarious Propylene manufacturers, spread across the domestic and internationalmarkets, suppliers and dealers/distributors to gain insights into value-chains anddemand-supply scenario to assess the market situation. Thorough study of thecompany’s annual reports and secondary sources such as exhaustive search oncredible paid databases, including our internal database is done to verify theinformation. All the collected information is analyzed, evaluated and presented inchronological order to depict a meaningful and clear picture of the concernedmarket.

Our dedicated team of industry experts comprehensively monitors and analyzesvarious aspects of the Global Propylene market. The team analyzes various industrialsegments, strategic viewpoints and provides an analysis of the industry’sperformance in the long run. This would enable our clients in efficiently plan theirfuture investments, mitigate risk, understand the cost dynamics and strike out abalance amidst market volatility.

Critical examination of the impact of COVID-19 pandemic on the global supplychains and shift in demand patterns with change in buying behavior of consumersacross the globe.

Several ongoing development projects across industries are tracked, followed by thedetails of major projects in the development stage, which can positively ornegatively influence Global Propylene market.

Pricing is captured through exhaustive primary interviews with domestic andinternational manufacturers, traders and importers and customers on monthly andyearly basis.

Finally, region-specific markets for Propylene are analyzed and region-wise demandpattern is tracked.

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Propylene Pricing Overview

About

Propylene (C3H6), or Propene is a colorless, three carbon hydrocarbon with

a naturally pungent smell. At room temperature, Propylene exists as an

extremely flammable gas which becomes a liquid under pressure. It is the

key chemical building block for a wide range of chemicals and

petrochemicals after Ethylene. There are three grades of propylene- polymer

grade (having minimum purity of 99.5 per cent), chemical grade (having

minimum purity of 93-94 per cent), and refinery grade (with a purity of around

60-70 per cent). More than half of the Propylene consumed globally is used

for the production of polypropylene (PP), a polymer popularly used for films

and packaging applications and a key material for plastic parts used across

various industries such as the automotive, textiles and many others. Other

important PP derivatives are Acrylonitrile (ACN), Propylene Oxide (PO), Oxo-

alcohols, Cumene and Acrylic Acid. The global Propylene industry is

particularly complex because of various methods of production and variety of

end uses it serves. Propylene is generally produced as a byproduct from the

steam cracking of liquid petrochemical feedstocks such as naphtha and LPG,

and from residual gases released in fluid catalytic cracking (FCC) units in

refineries. Propylene is also produced via on-purpose technologies such as

propane dehydrogenation (PDH), hydrodealkylation (HDA) of toluene,

toluene disproportionation (TDP) and metathesis. Being strongly tied to

several commodity petrochemicals, the overall Propylene consumption is

strongly linked to the general economic conditions and the expansion ofpolymer and petrochemical industries across the globe.