Data from Baiinfo shows that propylene oxide prices rose 14 yuan to 1,000 yuan per ton on August 14, an increase of 8.8 percent from last Friday (Aug. 11). TDI prices which have declined previously have also picked up gain recently. On the whole, the instable supply caused by environmental factors and market speculation are major factors causing the sharp rise in propylene oxide and TDI prices.
The China Securities Journal reported on August 15 that on August 14, the mainstream delivery prices for spot propylene oxide in East China recorded 12,400-12,500 yuan per ton on August 14; the transaction prices for spot propylene oxide in Shanghai were 12,300-12,600 yuan per ton, and that in South China were 12,100- 12,300 yuan per ton.
Environmental factor is one of the reasons to shore up propylene oxide prices. It is learnt that under environmental pressure, propylene oxide manufacturers in Shandong and other major producing areas cannot operate steadily. The tight supply of spot propylene oxide will remain. Manufacturers mainly offer goods to core users. Market prices continued to beat expectations again and again. The price of downstream polyether followed to rise.
Propylene oxide is an important derivative of propylene. The main production processes for propylene oxide include chlorohydrination, co-oxidation (also known as indirect oxidation) and direct oxidation. At present, chlorohydrination accounts for as high as 60 percent in China’s production capacity. Yet the process will generate lots of waste water and waste residue which are hard to dispose. Therefore, once the authorities increase environmental pressure, the production capacity of propylene oxide will be affected.
Baiinfo believed that that as the price of raw material propylene continues to decline slightly, there is no positive news in cost. Although Sinopec Changling is going to sell its products overseas, major manufacturers in North China continued to overhaul their equipment. Market supply remains tight, and the overall inventory is still insufficient. As downstream polyether prices tend to rise, and there is strong willingness to buy propylene oxide, these will greatly shore up the market. With bullish news, propylene oxide prices are expected to rise further in the short run.
At present, the major listed propylene oxide manufacturers include Befar Group Co., Ltd. (601678.SH) and Wanhua Chemical Group Co., Ltd. (600309.SH).
(Translated by Coral Zhong)
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