China’s PP market has been following a stable trend for over a month despite spot propylene prices being on a constant firming path within the same timeframe, as per ChemOrbis. China has also defied the tightness-driven-firming trend prevalent in the rest of the major markets, causing premium in the PP markets in Turkey and Southeast Asia to spike past levels in China to hit a year-high. In Turkey, supply tightness from the Middle East, Iran and Europe have pulled PP prices higher in recent months. The firming trend has been in place since mid-April. Even though trading activities have cooled off recently in line with the Ramadan lethargy and upcoming Eid holiday, some sellers think that further firming is still possible. Along with this week’s modest gains in PP prices, Turkey’s premium over China has almost touched $120/ton and hit a-year-high, although it is traditionally around US$60-80/ton under balanced market conditions.
In Southeast Asia, August PP prices have started to be revealed higher for another month. A source from a Saudi producer said, “Our allocation will be limited for August due to some production issues at our plant and we are feeling free from sales pressure.” Along with these increases, the premium Southeast Asia traditionally carries over China has spiked to more than US$100/ton, as can be seen from the graph below. Looking back further, the gap between the two regions has not been as wide as this since May 2011, according to ChemOrbis Price Index.
The possible reason why China’s PP market failed to catch up with the global firming trend, is possibly as players in the country report that distributors and traders are widely wary of the looming start-up of new coal-based-PP capacities. This factor is expected to keep the firming trend that has been in place in other major markets in check in China, according to some players.
24-Jul-14 
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