Global PP markets firm into April

Moving into April, global PP markets including China, Southeast Asia, Italy, Turkey and Egypt maintain their strength in line with the recent firming trend in the upstream chain, as per Chemorbis. As a result of the ongoing repercussions of the devastating Japan earthquake and the turmoil in the Middle East, crude oil prices have been hovering above $105/barrel since early last week, after breaching this threshold on the Nymex for the first time since 2008. Similarly, spot propylene prices in Asia rose by US$15/ton on the week, with the total propylene increase reaching US$85/ton compared to the start of March. Looking at the European market, the awaited April propylene contracts settled this week with a €25/ton increase from March levels, which is expected to shape the market next month. Given these factors, global PP markets appear to be starting the month of April on a firming note despite the widespread slowness in demand as well as buyers’ reluctance to pay any further increases. In China, although the lackluster demand has put the country’s local market in a bearish mood and forced domestic PP producers to cut prices further this week, April import PP offers from the Middle East to China were announced with noticeable increases of US$70/ton this week, with done deals being reported close to sellers’ initial prices. Due to support from costs, more overseas producers are expected to come with higher April prices to China, although price hikes are expected to be kept in check by slow demand and lower domestic prices. The Southeast Asian PP market has also started to witness similar increases from overseas producers, with a Middle Eastern producer lifting its April PP price by US$70/ton over March. Another regional producer, who had already been offering at the top end, said they will keep their prices firm at the prevailing level next month. Although there were no official price announcements in Italy and Turkey at the time of press, following Europe’s higher propylene settlements, which rose by another €25/ton for April, European PP producers are likely to come with higher initial prices to Italy next month amidst the earlier reports of tight PP availability across the region and higher production costs. After seeing a US$20/ton increase from the domestic producer Petkim, sellers in Turkey are also expecting to see firmer import prices. However, as the country is already trading at a premium over Asia, the increase amounts might be relatively modest. Nearby Egypt has already started to see higher PP prices from import supply sources, with a couple of Middle Eastern producers revealing their April PP prices with increases of US$30-75/ton on CIF Alexandria, cash basis this week.
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