PROPYLENE

Propylene prices steadied at US$1110/MT in Asia in the week of September 10, 2007. A small number of firm offers were heard from S.Korean producers due to shortage of supply, but prices remained firm as buyers preferred to wait and watch as downstream PP prices started upon a downward price correction. More than 10,000 tons of propylene cargoes were rendered as surplus to be sold in the Chinese market. This supply glut can be attributed to a plant outage at Shanghai Secco Petrochemical's 260,000 tpa acrylonitrile plant. The glut has not exerted any immediate effect on the current market sentiments, as the surplus will be used to compensate the loss of propylene production from Taiwan's Formosa Petrochemical Corporation (FPCC) No.1 cracking unit, scheduled to go on a month long maintenance turnaround after an unplanned outage. This will result in a loss of propylene production of approximately 30,000 tons and also lead Formosa to defer the turnaround schedule for its No.2 cracking unit until the end of the month. The surplus glut is expected to have a negative effect on propylene demand from China in October first week, coinciding with the long National Day holiday of China.

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