Asian PP markets have seen a continuous rise since the beginning of the month, encouraging sellers to raise their prices to Turkey starting from last week, as per Chemorbis. The combination of higher costs, better demand and lower supplies is the main reason behind the upsurge of these markets. Persistent supply issues resulting from scheduled shutdowns and unexpected outages in Asia have rendered sellers’ hands stronger in their negotiations and have helped them to ask for further increases this week.
Taiwan’s Formosa Petrochemicals is running their 850,000 tpa PP plant at reduced operating rates due to propylene outages, while China’s Nanjing Jinling’s 150,000 tpa PP plant is still not back after a shut down due to an explosion in late-July. Maintenance shutdowns in China scheduled for August include Daqing Refinery’s PP plant with 300,000 tpa capacity, Yangzi Petrochemical’s PP plant with 400,000 tpa capacity and Formosa Ningbo’s PP plant with 450,000 tpa capacity. Additionally, Petro Rabigh’s 700,000 tpa PP plant in Saudi Arabia also contributed to the supply problems in the region.
Combined with low inventories, higher spot propylene prices which rose by another US$70/ton on the week in Asia amid firm crude oil prices, which have been hovering above the US$80/barrel threshold since the beginning of August, import homo-PP offers in China posted additional increases ofUS $20/ton this week, which came on top of the initial price hikes of US$80-120/ton for August. In Southeast Asia, the overall import homo-PP level also moved higher by US$20-30/ton week over week, while traders reported seeing larger increases of US$70-100/ton inside the range. Producers pointed to tight supplies, along with their squeezed margins as a result of high propylene feedstock costs as the reasons for their price increases, while adding that they have restricted their offers to their local markets this month because of stronger demand from Chinese buyers. Although some converters were cautious about their purchases due to the upcoming holiday period, several buyers reported making purchases this week in order to cover their immediate needs as they feel that prices may remain on a firm trend over the next few weeks.
In Turkey, the abovementioned bullish developments, along with two consecutive price hikes from the domestic producer had great influence on the sentiment amongst sellers, pushing traders and producers to the sidelines as of the start of this week. Apart from a couple of early week prices, which were given with weekly increases of US$80-90/ton for materials of two Saudi Arabian producers, no import offers were reported as sellers preferred to wait for each other before making a move. Based on the deals which were done at the high end of the import raffia market this week, Middle Eastern offers in Turkey has even moved slightly above China for now.