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Chinese PP provides competitive edge in Southeast Asia, Türkiye

by Elif Sevde Yalçın - eyalcin@chemorbis.com
by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 04/03/2024 (02:41)
Players in Vietnam, Thailand and Türkiye reported receiving attractive offers for Chinese PP cargos this past week, putting a strain on other origins despite supportive upstream costs. These volumes emerged with prices way below regular Middle Eastern homo-PP offers, mirroring abundant capacities inside China as well as the need to deplete accumulating inventories right after the regional holidays.

The recent corrections in shipping costs and a lack of upside momentum in China’s import markets may also have paved the way for material flow into these markets.

Attractive Chinese offers cap price gains in nearest export outlets

This past week, the import PP markets in Thailand and Vietnam fell a visible pressure from competitive Chinese offers. Local producers’ offers followed a stable to lower trend, especially in Thailand, with an effort to compete with Chinese materials despite the cost push that has been on the table for a while.

In Thailand, Chinese homo-PP raffia offers were reported $50/ton below Middle Eastern origins on CIF basis, while the gap was wider with ASEAN origins at $60-70/ton. Deals were reported within the range for homo PP yarn grades.

Vietnam also saw import Chinese PP offers standing $40-60/ton below South Korean origins. “Although other import suppliers, except for Chinese sellers, maintained their prices in order to sustain their firm stance, buyers may get discounts during done deals. Thus, we haven’t witnessed much of a difference between prices before and after the holidays,” opined a Vietnamese trader, who pointed to the unaltering market conditions counterbalancing each other.

Other Southeast Asian markets saw rollovers this week since markets were stuck between higher production costs, and attractive prices of Chinese sellers. Although there were fewer offers from the Middle East across Asia due to the regional turnarounds, ample PP supplies from China hindered the uptrend in prices.

Looking at demand, Asia has not witnessed an improvement yet as downstream manufacturing operations have not ramped up fully. Converters couldn’t raise the prices of their finished products due to lower demand. Besides, players already procured their needs before the Chinese New Year, and they don’t feel the urge to restock while prices are considered high at the moment. Players are still in a wait-and-see mode as there is an expected downtrend in March. Also, the expected surge in prices after the holidays didn’t materialize, which added to the cautious sentiment among buyers.

Chinese offers appear $100/ton below the cheapest Mid-Eastern PP in Türkiye

Türkiye’s import PP market saw the rally that kicked off in H2 December stop last week in line with ebbing demand. Meanwhile, new PPH offers indicated rollovers to some downward corrections. This was attributed to waning interest in new shipment cargos at a time when lower-priced cargos are about to arrive following delays related to the Red Sea turmoil. The emergence of competitive Chinese PPH offers amid juicy netbacks in Türkiye has also kept players vigilant.

Chinese PP fibre prices below the $1100/ton CIF Türkiye mark surfaced for bulk shipments, while raffia was priced as low as slightly below $1050/ton with the same terms. These cargos traded $100/ton below the lowest prices for Middle Eastern origins , as per ChemOrbis data.

Nonetheless, attractive prices from China did not catch players by surprise, with an arbitrage window remaining wide open amid the recent corrections in freight rates. According to the weekly average data, Türkiye’s premium over China’s import homo-PP market neared $300/ton last month. The gap was compared to only around $60/ton recorded in the pre-Red Sea unrest period.

“We heard that some large converters secured Chinese PP cargos for March shipment, paying much more competitive prices than Saudi Arabian materials. They might have opted to take the advantage of cheap Asian cargos considering still long transit times from the Middle East as well as elevated price levels,” a player commented.

According to ChemOrbis Stats Wizard PRO, Türkiye imported less than 4,000 tons of homo-PP from China during 2023, steeply down from around 60,000 tons recorded back in 2021 and 2022.
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