Polypropylene prices move in opposing directions in SE Asia and China

17-Aug-10
Polypropylene prices are moving in opposing directions in China and Southeast Asia this week, as per Chemorbis. Prices have started to decline in China of falling crude oil prices, even as players in Southeast Asia witnessed further increases in domestic PP prices at the start of this week, due to better demand. At the start of the week, a Chinese producer announced domestic price reductions of CNY100/ton (US$15/ton) for homo-PP and CNY100-200/ton (US$15-30/ton) for PP block copolymer due to bearish market sentiment amid softening crude oil. Offers in the distribution market were down by CNY50-100/ton (US$7-15/ton), and a trader has reduced offers for mainstream Asian and Middle Eastern import origins by US$10-20/ton on poor demand. Most players acknowledged that current demand is not encouraging in the Chinese market, although some sellers are still insisting on their offer levels as theoretical production costs based on the prevailing spot propylene prices suggest that most producers are operating below their costs. In Southeast Asia, import offers for homo-PP injection and raffia jumped US$100/ton on both ends over the past week owing to bullish sentiment in the region as well as comparatively limited availability in the region. These increases were reflected in stronger offers for locally held cargoes, with most buyers meeting their immediate needs from the local market for the time being in the face of restricted import availability. In Vietnam, some deals were concluded late last week for material from PetroVietnam’s new 150,000 tpa PP plant with increases of US$70/ton from the early week offer levels for this origin, with distributors commenting that buyers are showing healthy demand for this origin. In Indonesia, a domestic producer announced an additional increase of US$20/ton on their offers this week in a move that had been anticipated by distributors late last week. Limited availability also drove up prices in Thailand’s domestic PP market, where offers for homo-PP injection and raffia gained THB1000-2500/ton (US$31-78/ton) over the course of past week. Demand in the region is generally said to be good, although many converters are still hesitant to purchase beyond their immediate requirements owing to the volatile economic conditions as well as expectations that regional demand will soften in September as several countries in the region will reduce consumption during the holidays marking the end of Ramadan in Muslim countries. Import PP offers also gained ground in the Indian market over the past week, with import offers reported towards the end of the week standing nearly US$200/ton higher than the import prices reported at the beginning of the week. PP demand in India was also said to be satisfactory, although traders commented that PP demand is not as strong as PVC demand in the Indian market.
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