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Exports bring temporary relief for Europe propylene

October 14/2011

(ICIS) -- A combination of exports and cracker operating rate reductions over the past four months has helped to offset some of the bearish pressure on propylene, which resulted from poor demand from its derivative polypropylene (PP) and varied production problems, market sources said on Friday.

About 100,000 tonnes of propylene has been booked for export since July, primarily to the US Gulf and Americas, the sources added. This has gone a long way to rebalancing players systems.
Weak demand and ever decreasing prices in Asia has led to little interest in exporting east. Shipowners are not keen to offer competitive freight rates to Asia, with one saying ships that end up there have nothing to take back, and rates are just too high".

But despite the slump, European players have worked to inure themselves against the demand slowdown. The propylene market is still viewed as balanced-to-long, and could lengthen further as a result of waning export potential and little sign of improvement in terms of demand.

US propylene contract prices for October settled down a significant 14 cents/lb ($309/tonne, ?224/tonne) from September, and spot prices have followed suit. This, together with the sizeable volume already imported, will limit export options.

Sources said the ability to move volumes from the European system has been the markets saving grace, but now it would be more difficult to manage volumes.

Tags:PP, propylene.
Category:General News
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