Propylene Prices To Remain Steady In Q1 2023 Due To Oversupply
Propylene prices are expected to remain stable in the first quarter of 2023 due to global oversupply and fluctuating demand. Overcapacity and weak downstream margins are influencing price trends.
The global market for propylene and polypropylene (PP) is anticipating an oversupply in early 2023, which is expected to keep prices stable through the first quarter. This situation is exacerbated by uncertain demand and constricted downstream margins, putting downward pressure on feedstock demand despite elevated oil prices.
In Asia, China is expected to see a supply surplus as new propane dehydrogenation (PDH) plants come online. The country's demand is projected to slow as the Lunar New Year approaches and purchasing power narrows. While inventory levels have decreased from the previous year, they remain elevated compared to historical averages. Middle Eastern refinery-based PP plants are unlikely to reduce production to maintain market share.
In Europe, a sluggish demand sentiment is predicted to persist. Inflationary pressures and the ongoing conflict in Ukraine are impacting economic conditions, consequently affecting propylene demand. Although prices have recovered from September lows, demand is expected to remain subdued due to macroeconomic challenges.
In the US, new polypropylene plant capacities are anticipated to support propylene demand in the first half of 2023. A decline in oil prices last year pressured propylene and PP prices downwards. New units from ExxonMobil and Enterprise Products Partners are set to increase supply and strengthen the market.