Jun Cracking C5 Price Rose in A Row
1. EXW Price
2. Market Review
China’s cracking C5 EXW prices presented increases in June. On June 28, 2022, the average EXW price of cracking C5 in China was RMB 6,155.56/mt, up RMB 322.23/mt M-O-M. The average EXW price of cracking C5 in June was RMB 6,009/mt, up 3.30% M-O-M.
In June, crude oil prices rose first and the fell sharply, lending strong support to the cracking C5 market in the early stage. The settlement price of feedstock naphtha at Sinopec declined in June, so the cost pressure on producers eased. In terms of cracking C5 producers, as a plant in East China and a plant in South China experienced unexpected shutdown, the overall operating rate of the industry dipped. Meanwhile, the operating rate of downstream separation units also declined, but underpinned by tight supply, the prices of piperylene and isoprene still trended up, which gave certain support to cracking C5 price. In June, the mainstream EXW price of cracking C5 increased by RMB 350-400/mt compared with that at the end of May.
As of June 28, mainstream EXW prices of cracking C5 at PetroChina and Sinopec were RMB 5,800/mt and RMB 6,200-6,250/mt respectively.
Semi-annual analysis: In the first half of 2022, the mainstream EXW price of cracking C5 gained first and then declined. The low price appeared in January and the high price appeared in April.
C5 prices rose from January to March. During this period, the prices of crude oil and naphtha both showed a rising trend, giving increased cost support to cracking C5 market. From February to March, units at Sinopec Maoming Petrochemical and Sinopec Yangzi Petrochemical were overhauled, leading to low inventory at producers and tight resources on the market. With the increase in downstream total demand, C5 price showed an upward trend.
From April to May, cracking C5 price mainly descended. Crude oil price showed a downward trend, and the mentality of market players was pessimistic. The overhauled units resumed operation, and the supply of goods gradually increased. The market transactions were sluggish and were mainly concluded based on rigid demand. Therefore, the mainstream EXW price showed a downward trend.
C5 price climbed in the June. The unexpected shutdown of a plant in East China and a plant in South China reduced the overall supply in the market. In addition, the prices of piperylene and isoprene rose under tight supply, which supported the price of C5.
3. Market Forecast
To sum up, it is expected that cracking C5 market will stay weak in July, with prevailing prices of RMB 5,600-6,100/mt.
From August to September, the price focus of crude oil may continue a move lower, and C5 price will probably follow the trend of crude oil price. However, support by the Mid-Autumn Festival and National Day holidays, the downstream users may replenish inventories in September. Therefore, it is expected that cracking C5 price may show an upward trend in September.
In the second half of the year, the macro pressure on crude oil will continue to exist, and the summer demand in the United States will gradually reduce. In terms of supply, the units at PetroChina Guangdong Petrochemical, Shenghong Petrochemical and Hainan Petrochemical are planned to be put into operation in the second half of the year, and the overall supply of goods in the market is expected to increase. In terms of downstream market, Zhanjiang Zhonghe Chemical and Fujian Fuhua Luhua New Material plan to bring new units online, so the overall demand will improve compared with H1, 2022. Specific attention should still be paid to the crude oil market and downstream demand.
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