Polypropylene sentiment in SE Asia, Turkey shifts on recent upturn in China

After being on a downward trend for the past few months, China’s PP market has showed some recovery, recently as per ChemOrbis. Firmer naphtha costs in Asia and rebounding crude oil prices, which gained US$6/barrel on the Nymex since the start of last week, led to an unexpected rally in China’s domestic market which generated some demand from traders and distributors who want to restock before prices potentially move higher. Expecting the firmer trend to be in place for a while longer, many import sellers raised homo PP raffia and injection prices this week, causing US$10-20/ton increases in the overall spot range week over week. Slightly better import demand and higher market levels were cited as the main drivers behind the shift in import prices. A source at a global producer also commented that trading activities have picked up on the back of higher domestic market prices. After selling some volumes of Singaporean PP, they are now aiming to sell this material at higher prices. The recent upturn in China’s PP market caused players in Southeast Asia to question the likelihood of any further July decreases earlier this week. According to recent reports, demand is improving in the region’s local markets as the sentiment has changed direction as of this week. A distributor in India reported that the low end of the offers is disappearing in line with the current price trend in the Chinese market while a converter in Indonesia said distributors have started to offer locally held cargoes US$20/ton higher than the list prices of the local producer. A distributor in Vietnam stated that the range for locally-held import PP cargoes is beginning to move higher once again on the strength of stronger local prices in China. A Thai distributor commented that they expect to see higher prices from domestic producers over the short term as buying interest has begun to pick up in the local market. Although players haven’t reported any price hikes in the import market yet, traders reported that PP suppliers are tending to withdraw their offers at the lower end of the price ranges. Turkey’s PP market has also been affected by the recent developments in Asia, with sellers in Turkey speculating that the market will see an upturn in the short term due to the recent price increases in China. A trader warned his customers this week that the prevailing prices will not be available in the upcoming days, claiming that some PP producers are raising their offers nowadays. Although the recent rebound in China’s PP market has caused increasing optimism over the prospects in the near future, Chinese buyers are skeptical of the prospect of further price increases given unspectacular end product demand. Although some converters in China have returned to the market to make new purchases in anticipation of higher prices over the short term, there are buyers stating that the market dynamics for July may well be dominated by the same combination of sluggish demand and ample supply which has been seen for the past month. In addition, the Chinese government just raised its benchmark interest rates once again yesterday for the third time this year which will also weigh down on the converters’ outlook.