PP market in China plunges to 3 year low, but still lags propylene’s fall

08-Dec-14

China’s import PP market has recorded the largest weekly loss in over 2 years, according to ChemOrbis Price Index. Import homo PP prices have fallen by US$50/ton this week on average. The low end of the range even broke below a new threshold, which was last seen in late 2011. Nevertheless, the losses in the upstream markets are much larger than that of PP. Spot propylene prices plunged by around US$100/ton in the past week in Asia. Average spot propylene prices on FOB South Korea basis have dipped below the US$1000/ton threshold, which was last seen in late 2009. The gap between propylene and PP has widened recently, improving margins on the PP side. In addition to the pressure from the upstream chain, the ongoing additions of new coal based capacities inside China are also exerting downward pressure on the PP market. “We hear that some traders are forward selling materials for Q1-2015 at even lower prices. We are struggling to conclude deals even on a back to back basis now as most buyers are keeping to the sidelines in anticipation of seeing further price reductions over the near term,” a trader stated.