Propylene prices in Asia soared to 31-month high Thursday as the CFR China marker was assessed at $1,031/mt, up $10/mt on the day and $19/mt on the week.
The marker was last assessed at $1,030/mt on May 11, 2015.
Market sources said prices for January were expected to be bullish on planned turnarounds, especially in Northeast Asia. From naphtha-fed steam crackers alone, at least 2.2 million mt/year of combined capacity will be off-line. The biggest impact will be in Japan.
In northern China, Tianjin Bohai shut its 600,000 mt/year propane dehydrogenation plant Thursday for maintenance, a company source said.
Although the month-long turnaround was expected by the market, the shut-down date was brought forward from the initial date of January 15.
The reason for an earlier turnaround was to restart the plant before the Chinese New Year holidays which will begin on February 15, the source noted.
Restocking ahead of these holidays -- which will run to February 21 -- are likely to buoy bullish propylene prices for most of Q1.
Downstream polypropylene prices from a stronger futures market lent further support for firmer propylene.
On the Dalian Commodities Exchange, the most actively traded May PP futures contract closed at Yuan 9,504/mt Thursday, up from Yuan 9,486/mt the day before. PP CFR China was assessed at $1,170/mt Thursday, unchanged on the day but up $20/mt on the week.
One buyer said propylene prices were rising too fast and risked correction.
A handful of market sources said the Chinese government would continue to monitor pollution from propylene plants, especially in Shandong province, throughout 2018.
"Plants will be asked to reduce operating rates if pollution levels get out of control," a source said. This could raise propylene import prices.
Known turnarounds until June this year are expected to keep propylene prices supported.
