PP fibre grade offered at elevated levels from the Middle East for March

17-Feb-10

A converter in Turkey reported receiving a higher offer from a Middle East major for March shipment cargoes for PP fibre grade, at US$1460/ton CPT Turkey, subject to 3% duty, cash, up US$20/ton from recent offers from the same producer, as per Chemorbis. The higher March offer is in line with producers’ pronouncements about the outlook for PP following the Chinese New Year holiday. Although PP has lost support from the energy complex after several weeks of lower prices for both crude oil and naphtha, producers argue that the Chinese buyers will be back after the holiday in need of restocking. At the same time, propylene costs in Asia are still supportive of higher PP prices to China while the outlook for spot propylene is currently firmed based on the large number of propylene plant shutdowns scheduled in the region in the coming few months. Producers selling to China are expected to try for higher initial prices for March and some feel that done deals will be achieved, at least initially, at higher levels because of the return of demand. On the other hand, some Asian players said before the New Year holiday that the post-holiday rally is likely to be short-lived before returning back to previous levels because of the lack of support from the energy complex, plus tightening by the Chinese government to slow the heated economy, combined with new and restarted capacities coming in the near future.