MUMBAI (ChemAnalyst)-Polyolefin Elastomer (POE) has been gaining consistently in the last couple of months, and the uptrend in prices has been seen in the latest assessment in May 2022. Olefins have been healthy in the Asian market owing to continuous bullish rally in crude oil and natural gas markets, and thus, olefins have been maintaining firm cost pressure on downstream POE.

In South Korea, both Olefins, Ethylene, and Propylene have witnessed little to no change on a daily basis however, the current price levels have been assessed as stiff for buyers, and consequently, buying sentiment has been muted in the Asian market. Similarly, cost pressure on domestically produced materials has been high in the Far East Asian region. On the demand side, consumption from downstream healthcare, automotive, construction, electrical, and electronics industries has been healthy. Exports of the material have been delayed on the back of snug global supply chains amid covid hit Chinese ports limiting the availability of vessels and containers. As of the week ending 6th May 2022, Butene-based POE prices have increased by 1.12% on a weekly basis.

In the Chinese market, the demand of Polyolefin Elastomer has been stable despite a strong pricing sentiment in the domestic market. Healthcare has been a key beneficiary of the firm consumption rates along with the automotive industry, while the construction industry has been set to increase volume intake. Imports to the Chinese ports have been ample however, port congestion and diversion of vessels to different ports have hampered supply fundamentals. Ningbo port has been reported to have high congestion due to the re-routing of vessels from the Shanghai port. Consequently, the supply of Polyolefin elastomer has been delayed in the domestic markets of China. During the first week of May 2022, Octene based POE prices have been assessed at USD 3388 per MT on CFR basis.

Meanwhile, natural gas prices have been unrelenting in the US, pressuring downstream chains, including olefins and aromatics. Hence, Ethylene and propylene have gained consistently in previous assessments. Upstream cost pressure on upstream olefins has translated into increased pressure on downstream POE. Dow, a key producer of POE, has reported a persistent increase in raw material prices along with limited availability of additives, resulting in strong pricing sentiment of POE in the domestic as well as international market.

As per ChemAnalyst, “Polyolefin Elastomer market is expected to remain bullish in the coming weeks due to strong cost pressure owing to up-trending energy feedstocks and snug supply fundamentals.”