PROPYLENE

Propylene offers ploughed through at around last weeks' level of US$110-1115/MT in Asia in the week of Sep 3, 2007. End user demand has been lame as buyers from China preferred to “wait and watch” for a down-adjustment of offer prices. Downstream PP market continues to lose upward momentum, further reducing demand for propylene. On the supply side- The Chinese market has been affected by the arrival of cargoes from Japan. This supply surplus is being coupled with reluctance to lower prices below last week's levels on behalf of South Korean producers, as they perceive a drop in supplies from Taiwan, as Formosa has delayed the restart of its troubled no.1 naphtha cracker at Mailiao. For the rest of the month, market supply is likely to be tightened on account of upcoming turnaround outages at propylene units in S. Korea and Japan. However, relatively higher inventories available with Japanese traders could balance out the expected supply crunch.