SE Asian buyers anticipate further price reductions as import PP sinks to five month low

30-Jul-15

Import homo-PP prices on a CFR SE Asia basis have fallen to their lowest levels in the past five months in the face of steadily falling prices in the nearby Chinese market, according to data from ChemOrbis Price Index. Buyers in the region anticipate further reductions on the belief that the market has yet to bottom out, given ongoing declines in China, Prices are on the decline in China which is suffering from ample supply levels owing to the significant additions of new coal based capacities over the past year. After reaching a year-to-date high in mid-May, homo-PP prices on a CFR SE Asia basis have fallen by US$214/ton, according to data from ChemOrbis Price Index. A trader based in Vietnam said that they are not planning to make any fresh purchases despite receiving lower offers for Indian and Middle Eastern homo-PP. “We think that prices will fall by an additional US$100-150/ton in the coming weeks and are therefore unwilling to restock. Demand is limited as most converters are also delaying their purchases in anticipation of further price reductions,” the trader stated. A trader offering Thai material to Indonesia and Vietnam commented, “We had been hoping to conclude more deals to Indonesia after the Ramadan holidays, but buyers there remain hesitant to purchase even though we reduced our prices.” A trader based in Vietnam is said to be delaying purchases even though they received a competitive offer for a Chinese origin this week. “We might purchase if prices fell by another US$100/ton, but we judge the current levels to be too high to accept,” the trader stated. A trader in Malaysia said that they received an offer for coal-based Chinese raffia this week. “We decided not to accept this offer as we believe that prices still have room to come down. We have never imported material from China before and are currently exploring the logistics of purchasing from China. We were quoted a price of around US$100/container for a 20 foot container to be shipped from China to Malaysia,” the trader commented. A converter operating in Indonesia added, “We are deferring our purchases for now as our stock levels are satisfactory while we anticipate further reductions in the days ahead. We find new offers for non-dutiable Southeast Asian origins to be more competitive than offer for Middle Eastern cargoes these days.”