China's propylene spot prices may not increase further

(ICIS) -- China's propylene spot prices may not increase further as the buying sentiment in the country remains weak amid worries over the global economy and volatile feedstock crude prices, market sources said on Thursday.

The European debt crisis and the prospect of a double-dip recession in the US may affect the demand for finished goods from China, which is the world's largest manufacturing hub, the sources said.

Chinese producers use petrochemicals to produce a wide range of consumer items from toys to textiles, which are exported to Europe and the US. The weakening demand from these key markets will have a significant impact on the supply chain, the sources added.

Offers and selling ideas for propylene cargoes arriving in September hovered at around USD 1.600/tonne (EUR 1.104/tonne) CFR (cost & freight) China this week, but this was met with weak interest from end-users who preferred to stay on the sidelines.


MRC

(SIBUR) -- SIBUR has presented details of its liquefied petroleum gas (LPG) and light oil products complex, currently under construction in the Ust-Luga commercial port in the Leningrad Region, to major international companies including Shell, BASF, Repsol and LyondellBasell.

The facility will be the largest terminal in the CIS for the transhipment of LPG and the only one in Russia's Northwest region ideally placed for the Western European export market. The complex is designed to handle up to 1.5 million tonnes of LPG and up to 2.5 million tonnes of light oil products (stable natural gas) per annum. It is due to begin operations in the first quarter of 2013.

Experts predict that LPG production in Russia will grow from 9.7 million tonnes at the end of 2010 to 16.4 million tonnes by 2015. A significant portion of this increase will be supplied to the domestic market as petrochemical feedstock and fuel to the public utility sector.

MRC

(ICIS) -- European polypropylene (PP) buyers and sellers are watching the volatile crude market with interest to gain an idea of where PP prices will land in September, several said on Monday.
⌠Everybody is just watching everybody else to see what will happen, said one producer. August business is now over and European prices have mostly fallen by EUR 15/tonne (USD 21/tonne), in line with the drop in the propylene contract price.

Freely-negotiated PP accounts, as well as those with links to propylene, fell in line but some buyers reported more substantial drops by the middle of the month.

PP prices suffered far less turmoil in August than in June and July, when some fell by as much as EUR 250/tonne over both months as imports made their way to Europe and demand waned on news of economic woes.

The focus of the PP market is now September, and more precisely, where the new European propylene contract will settle.

Economic worries have not gone away, but in spite of volatility in upstream crude and naphtha prices further significant falls have been avoided. Most sources acknowledge that there will be a fall in the new contract, but the extent of that is still open to discussion.


MRC

(Plastemart) -- In addition to two pressure tanks that have been shut, the Taiwanese government has ordered Formosa Plastics Group to suspend use of four more pressure tanks at Mailiao petrochemical complex. The shutdown, with effect from mid-August, is of the tanks run by Formosa Petrochemical and Formosa Chemicals & Fibre, and has been triggered by fear that the materials of the tanks are prone to explosion. Safety checks will likely last for two months.

MRC

(ICIS) -- Diethylene glycol (DEG) prices in Asia fell to their lowest level in nearly one year, and may continue declining in the weeks ahead, given high inventory at ports amid sluggish demand, industry sources said on Tuesday.

In the week ending 19 August 2011, spot DEG values were assessed at an average of USD 1.170/tonne (EUR 819/tonne) CFR (cost and freight) CMP (China Main Port) - levels last seen on 10 September last year, according to ICIS. DEG's average prices have fallen 12.5% since the start of the year, ICIS data showed.

Demand from downstream unsaturated polyester resins (UPR) and polyurethane (PU) sectors in China is seasonally weak, with most UPR plants running at just half their capacity, industry sources said.

The measures taken by the Chinese government to cool the property sector have also significantly trimmed demand for UPR and PU this year, said a trader.


MRC