Asian PP markets jump higher on rising costs

06-Jan-10
The PP market started the first week of 2010 in China and SE Asia with considerable price hikes from suppliers, which has led to a larger disparity between the prevailing import offers in the Mediterranean markets and the new spot prices in Asia as per Chemorbis. Steadily rising feedstock costs, along with supply concerns for propylene resulting from problems in the upstream chain caused higher import offers to Asia this week. The bullish run of crude oil prices, on the rise since H2-December, reaching above the $80/barrel psychological threshold, was also a significant driver behind the strong upward trend as it fuelled bullish speculations in the Chinese market, leading players to purchase this week. In China, a global producer announced a price hike of US$70/ton on their January homo-PP offers this week, bringing their new price for Middle Eastern origin to US$1280/ton CFR China, cash. The producer cited limited allocations and the bullish domestic market, which rose by US$20-75/ton this week also due to higher inflation expectations and delivery disruptions from snow storms. Another Middle Eastern supplier issued a larger increase of US$100/ton on their homo-PP offers for later shipment, raising their price to $1320/ton CFR China, cash. Several deals were heard concluded at US$1300/ton with the same terms this week. In Southeast Asia, local prices rose by US$30-50/ton week-on-week, along with the import markets that witnessed a significant jump in January prices as well. According to reports from the region, a number of players received homo-PP raffia offers as high as US$1270-1300/ton CIF SEA this week, which represent an increase of $70/ton from December. Players attributed higher prices to the fact that buy interest has showed some revival following the New Year holidays as traders in the region are looking for import materials these days due to the persistent bullish trend in China. Therefore, the prevailing Middle Eastern offers in the region, which are available at US$1200-1250/ton CIF SEA for now, are reported to see good buy interest. Based on the bullish market sentiment and rising upstream costs, players voice strong expectations that other producers will also announce their new PP prices with large increases.
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