South East Asia's PP market rising at a faster pace than China

South East Asia’s PP market rising at a faster pace than China

29-Jul-11

Import PP prices in China and Southeast Asia have posted noticeable increases over the past month as sellers in both regions struggled to achieve price hikes in line with the spurt in spot propylene prices, as Chemorbis. Sellers in Southeast Asia have managed to achieve relatively larger hikes over the past month on strong demand and limited availability. A Thai producer offering near the high end of the overall offer range to Southeast Asia managed to sell around 1,000 tons of homo-PP this week at prices equal to their initial offer levels. Homo-PP supply in the region is tight as many Southeast Asian producers are focusing more on their PP copolymer production given comparatively stronger demand in China these days. According to data from ChemOrbis Price Index, import homo-PP injection and raffia prices have posted cumulative increases of US$140-190/ton on a CIF SEA basis when compared with the last week of June while prices on a CFR China basis have posted relatively smaller increases of US$100-110/ton over the same time frame. Sellers in both regions have been frantically trying to keep up with rapidly increasing spot propylene prices, which have gained US$150/ton on an FOB Korea basis since the beginning of the month. Although China’s PP market has been lagging behind the SE Asian PP market for the past few weeks, sellers offering in China’s import market are feeling confident that they will be able to close the gap in the coming weeks. This is because sentiment is bullish in the Chinese market as several sellers offering towards the lower end of the past week’s range report to have sold out. A trader who sold some Saudi Arabian homo-PP at the top end of the overall import range this week said that they expect further price increases in the days ahead owing to limited supply because of a number of scheduled turnarounds inside China in the coming month along with the fact that overseas sellers still need to achieve some additional price hikes in order to cover their theoretical production costs based on spot propylene prices.