Propylene prices march higher in Asia

Last week, propylene prices gained in the Asian region.

An industry source in Asia, requesting to remain unidentified, informed a Polymerupdate team member, "The Asian propylene market saw an increase mainly due to restricted supply conditions. Propylene supply was significantly restricted, particularly from South Korea, as manufacturers readied themselves for the impending steam cracker maintenance period set to begin in mid-October. The expected shutdown resulted in fewer spot offers, as suppliers withheld cargoes in expectation of increased prices or to strategically manage their inventories. As a result, the limited supply situation facilitated price hikes in the market, illustrating the general lack of immediate availability and the market's responsiveness to forthcoming maintenance operations.”

The source added, "The Asian olefins market is facing a pivotal moment, dealing with excess capacity and a tough economic environment. Based on information provided by industry specialists, the sector is not anticipated to regain pre-COVID-19 profit levels in the near future. Rather, a slow recovery is expected, with operating rates for ethylene and propylene anticipated to reach a low point around 2027 before experiencing gradual enhancement by the decade's end. According to experts, recent years of capacity increases in the olefins sector have resulted in a notable discrepancy between supply and demand. This has led to negative margins and decreased operating rates, driving rationalization efforts in both Asia and Europe.”

On Friday, FOB Korea propylene prices were assessed at the USD 765-775/mt levels, a week on week increase of USD (+10/mt). CFR China propylene prices were assessed at the USD 800-810/mt levels, a rise of USD (+15/mt) from the previous week.

The perspective for the Chinese propylene market is increasingly complicated by changing supply dynamics. China is set to see an early increase in propane dehydrogenation (PDH) capacity, with around 25 million metric tons per year expected to be added by 2025. Nevertheless, the next wave of capacity growth is anticipated to be much smaller, adding less than 4 million metric tons annually, mainly because of persistent weak margins in the industry, as reported by converters. This restricted increase in extra capacity implies that China's supply will level off instead of growing rapidly. Market analysts predict that by approximately 2029-2030, China's enhanced production capacity may enable the nation to become a net exporter of propylene derivatives, altering the conventional import-reliant dynamic and influencing regional trade patterns.

FOB Japan propylene prices were assessed at the USD 760-770/mt levels, up USD (+15/mt) week on week.

CFR Taiwan propylene prices were assessed at the USD 785-795/mt levels, higher by USD (+30/mt) from the previous week. CFR Southeast Asia propylene prices were assessed at the 755-765/mt levels, a week on week hike of USD (+15/mt).

Producers noted that Taiwan's demand levels stayed weak, indicating a lack of strong buying activity and minimal market excitement. Nonetheless, certain market sources indicated that possible price increases could be restricted or limited. This perspective was influenced by ongoing sluggish sales and low margins in the important downstream polypropylene sector, suggesting that downstream demand stayed weak. The interplay of lukewarm demand and narrow profit margins for polypropylene indicated that substantial price hikes in the short term might be limited, as purchasers stayed wary and producers encountered little motivation to raise prices amid unpredictable market conditions.

In plant news, S-Oil Corp is likely to halt production at its No.1 residue fluid catalytic cracker (RFCC) unit by mid-October 2025. The unit is slated to remain offline until end November 2025. Located in Onsan, South Korea, the No.1 RFCC unit has a crude processing capacity of 73,000 bbl/day and propylene production capacity of 200,000 mt/year.

In other plant news, Zhejiang Xingxing New Energy has restarted its Methanol-to-olefins (MTO) plant last weekend following a scheduled turnaround. The plant had been shut for maintenance in early August 2025. The restart could not be verified indepenently. Located in Zhejiang, China, the MTO plant has ethylene and propylene capacities of 300,000 mt/year each.