Polypropylene prices drop in South East Asia, put pressure on China

Import homo-PP prices in China are facing downward pressure from more competitive domestic prices and weakening import prices in Southeast Asia, as per Chemorbis. Higher import homo-PP prices in SE Asia vs the prevailing import prices to China for the past several weeks, has helped encourage sellers to take a firmer stance on their prices to the Chinese market, while a number of Chinese traders have been actively looking to re-export their stocks to Southeast Asia and other global markets. However, these traders are having an increasingly difficult time concluding re-export deals to SE Asia as prices are beginning to soften in the region in the face of persistently sluggish demand. According to data from ChemOrbis Price Index, CFR China import homo-PP prices have been steady for the past three weeks, with sellers unwilling to reduce prices as overseas producers are operating below theoretical production costs even at the upper end of the overall range. Domestic homo-PP prices inside China have also held mostly steady over the past three weeks, although distributors reduced their prices by around CNY100-200/ton (US$15-31/ton) last week. At the same time, several domestic producers have adjusted pricing policy such that they are prepared to give retroactive discounts to their customers, suggesting that domestic homo-PP prices will move lower over the near term. Domestic prices are currently trading with a discount of around US$105-115/ton when compared with the prevailing import homo-PP price range. In Southeast Asia, import homo-PP prices on a CIF SEA, cash equivalent basis decreased US$40-50/ton over the past week as sellers conceded to some price reductions in hopes of speeding up their sales in the face of sluggish demand. A Southeast Asian producer concluded some deals at prices US$20-40/ton below their initial May price levels, which were announced with rollovers earlier this month. A Middle Eastern producer cut their May prices by US$30-40/ton from their mid-April price levels owing to poor demand for import cargoes. Prices inside the region’s local markets were mostly stable over the past week, although offers from distributors have been reported at prices as much as US$60-90/ton below the producer price level.
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