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Arbitrage window opens to Southeast Asian PP market from China

by ChemOrbis Editorial Team -
  • 28/03/2016 (03:51)
According to ChemOrbis Price Wizard, import homo-PP prices are offered at a discount in China when compared to the prices given to Southeast Asia. In Southeast Asia and China, import homo-PP prices were on par in late August 2015. However, since then, the gap between these markets has started to widen and, as of last week, it reached around $110/ton.

To track weekly developments in Southeast Asia’s PP market, please see SEA/India Weekly PP Analysis (For members only)

Supply constraints on the back of the maintenance season as well as the stronger upstream costs pushed import homo-PP prices in Southeast Asia to seven-month highs. According to players in the region, PP prices have jumped more than $100/ton over this past month.

To track weekly developments in China’s PP market, please see China Weekly PP Analysis (For members only)

Meanwhile, the increase in China’s PP market has been more modest. This situation caused around a $110/ton gap between the average import homo-PP prices given to China and prices given to Southeast Asia, as can be seen in the below ChemOrbis Price Wizard graph. This gap can be deemed as the highest premium difference over a year’s period.

Source: ChemOrbis Price Wizard

Apart from the lower import PP prices in China, last week, Vietnamese players also reported a Chinese homo-PP price standing close to the low end of the overall import range in that country. Considering these developments, Chinese sellers might be looking to export or re-export their cargoes to the Southeast Asian PP market.
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