Sentiment in Asia’s PP market lackluster as oil prices plunge

12-May-10
Crude oil prices lost over eleven dollar in the previous week to settle at US$75.11/barrel last Friday before showing a slight rebound at the start of this week. As per Chemorbis, the drop in crude futures was triggered by debt troubles in Europe and renewed efforts to tighten monetary policy by China’s Central Bank. Plunging oil prices also pulled naphtha values down, with prices falling by forty dollars in Asia over the past week. This significant slide in the upstream chain has taken a toll on sentiments in China’s PP market, with May offer levels seeing downward revisions from domestic producers and resellers this week. Asian producers had announced US$20-80/ton increases to the Southeast Asian market for May on increased costs, encouraging domestic producers in the region to hike prices by up to US$35/ton. This week, an unexpected decrease of US$20/ton came from a domestic producer in Indonesia, although the import market has not shown any sign of decrease yet. This development caused concerns amongst sellers about the future demand. In China, where Asian producers had initially revealed May PP offers with increases of US$20-90/ton from last month, weaker crude oil prices have brought some price cuts this week for the first time since early March. Although import prices from some overseas producers held steady this week, the market saw US$20-30/ton discounts on done deals compared to the early May levels, which caused the low end of the overall import range to fall by US$30/ton week over week. Prices from bonded warehouses were also down by US$20-30/ton due to lower done deals. Inside China, lower crude futures weighed led to price cuts from a couple of local producers. Under the influence of dipping oil prices, along with high stocks as a result of recent unhealthy demand conditions, two major domestic producers, CNPC and SINOPEC cut their prices by CNY100-300/ton (US$15-44/ton) this week, pioneering the downward trend in the local market as some distributors also followed the same pricing strategy. Current prices of Asian PP sellers are still well supported due to the ongoing propylene turnarounds in the region, along with marginally decreased spot propylene prices in Asia. Spot propylene prices posted only slight decreases over the past week, thereby holding the production costs above producers’ current PP offers, the recent plunge in the oil market overshadowed the viability of a firm market trend as this week’s price cuts show that the sentiment amongst sellers has shifted recently after beginning the month on a bullish trend.
  More News  Post Your Comment
{{comment.Name}} made a post.
{{comment.DateTimeStampDisplay}}

{{comment.Comments}}

COMMENTS

0

There are no comments to display. Be the first one to comment!

*

Name Required.

*

Email Id Required.

Email Id Not Valid.

*

Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.
*

Message Required.

Click to Change image  Refresh Captcha