Higher costs, limited availability push up PP prices in SE Asia

Spot PP prices in Southeast Asia have moved higher over the past week along with rising upstream costs and limited regional availability as per ChemOrbis. The market is expecting to receive shortly, fresh offers from major overseas producers with increases over the July levels, as most import offers are currently below theoretical production costs based on spot propylene prices. According to data from ChemOrbis Price Index, import offers for homo-PP on a CIF SEA, cash equivalent basis gained US$50-100/ton over the past week. Higher import prices were attributed to rising upstream costs along with bullish sentiment in China. Import supply was also comparatively limited last week as most overseas producers withdrew from the market before announcing August prices. Theoretical cost calculations based on spot propylene prices suggest that August import prices will be announced higher as overseas producers not offering at the very top of the overall price range are currently below their theoretical breakeven level. A trader said that they received an offer for Indian PP raffia last week at a price US$90/ton higher than their most recent done deal level for this origin. A converter has received an offer for PP raffia from the same producer at the start of this week with another increase of US$20-30/ton above the producer’s most recent price levels. Buyers were said to have been more active in the market over the past week as they needed to replenish stocks following a long period of absence from the market. PP prices in the region’s local markets also posted considerable increases over the past week. An Indonesian producer began the week by lifting homo-PP prices in domestic markets by US$60/ton, after a US$50/ton increase by the producer last week. The producer attributed price hikes to stronger regional trends as well as firmer upstream costs. A distributor in Vietnam has raised prices for domestic homo-PP by US$40/ton over the past week, mainly on stronger prices in the Chinese market and firmer upstream costs. The distributor believes that the current rally is a correction following a long period of price decreases and that demand is still not strong enough to support a stronger rally for now. In Thailand, distributors lifted prices by THB500-1000/ton (US$17-33/ton) over the past week, commenting that demand picked up last week as buyers returned to the market to make fresh purchases but has since slowed down as buyers wait in the sidelines after securing immediate needs. In Malaysia, distributors stated that they have almost sold out July allocations at prices close to their initial July offers, commenting that July demand has been better than June and that their allocations have been comparatively limited for this month.