Limited Polypropylene supplies seen in major regions

Players in Asia, Europe, Middle-East and Africa report limited PP supplies this month due to plant shutdowns and lower operating rates, as per ChemOrbis. Even though demand is not considered strong enough to support price hikes across the globe, supply concerns appear to be dominating the PP market outlook, in addition to the firming crude oil and naphtha costs. When looking at Asia, China’s domestic producers, CNPC and Sinopec, have been running their PP plants at reduced operating rates since early June, which has helped them take a firmer stance on their pricing policy. For a second week in a row, they have applied price hikes in the domestic PP market. “Demand is not all that encouraging, but producers are maintaining a firm stance on their prices due to some supply limitations,” commented a distributor based in Hangzhou. In the import market, Middle Eastern producers also reported to have less than normal allocations to China this month. Middle Eastern sellers’ allocations have been limited to other markets as well including Southeast Asia, Turkey, Egypt and Africa, according to players’ reports. A source at a Malaysian producer commented, “Middle Eastern producers must be running their plants at reduced rates due to sluggish global demand. We also think that upcoming Ramadan and the summer period may keep the allocations from the region limited.” Apart from the limited Middle Eastern availability, Turkey’s PP market is also facing supply limitations from other regional sources. The number of Turkmen, Iranian and European raffia offers has been noticeably down while Egyptian PP raffia and fibre had already been absent for quite a while. Plus, Russian Sibur, which is a regular source of raffia for Turkey albeit in limited amounts, is heard to be planning a maintenance shutdown at its 500,000 tons/year PP plant in Tobolsk in early July. Egyptian players have also been suffering from the same problem of limited allocations from the Middle Eastern suppliers. The absence of the domestic PP producer, EPPC, has been contributing to the restrictions in the availability. “We have already sold out our limited June quotas for Middle Eastern PP in the import market. Meanwhile, we see rather limited locally held PP injection supplies, too, but demand is not that bright, either,” said a trader. African markets have been exposed to the same supply limitations this month. A trader selling to both Kenya and Tanzania commented, “We already sold out the cargoes we offered on behalf of a major Saudi Arabian producer. We asked for additional quotas but failed to get any amidst tight supplies from the regional producers. Now that supply remains tight in Africa, we anticipate even higher July levels than June.” The ongoing and upcoming plant shutdowns across Europe have resulted in limited PP availability as well. Although a few plants in Central Europe reportedly resumed operations after turnarounds, Total Petrochemicals’ three PP plants with a combined capacity of 900,000 tpa in Feluy, Belgium have been undergoing a planned maintenance shutdown since end May and are expected to remain offline for six weeks. SABIC Europe is also planning to shut its two PP units with a combined capacity of 620,000 tpa in Geleen, the Netherlands for a 2-week turnaround in the second half of June. ExxonMobil’s force majeure on PP from its 270,000 tpa Lillebonne site in France that was declared two weeks ago is still been in place, meanwhile. According to ChemOrbis, despite the ongoing supply problems, demand is not considered brilliant either in Italy or Northwest European countries. “Demand isn’t doing so well but our supply is quite short especially for copolymers,” said a distributor in Belgium. Other distributors also agree that short supply is in balance with mediocre demand. According to a seller in the Netherlands, PP prices may gain further ground in July considering tight supply despite lower spot propylene prices.