Competition heats up in SE Asia as aggressive offers for S. Korean PP, PE re-emerge

Southeast Asia PP and PE markets have been steadily losing ground since late March. Aggressive offers from China and Russia were the main trigger behind this slump, while the competition is getting fierce as South Korea has also stepped up efforts to raise market share in Southeast Asia.

ChemOrbis Price Index suggests a cumulative slump of 5% in the past four weeks on average in the import PP and PE markets. Within this period, import PP and PE markets across the region, particularly the ones in Vietnam, have already been smothered by competitive Russia and China origin PP and PE offers. South Korean suppliers have also stood out recently as they have followed suit with their aggressive offers.

Stats: South Korea’s PP, PE exports to Vietnam see precipitous climb

Q1 statistics suggest that South Korea managed to ramp up sales to China, which is by far the main export destination for the country. PE exports were up by 31% in Q1 y-o-y while PP exports saw a relatively small increase of 6% in the same period. This increase was despite the fact that China has been adding new capacities at home.

When it comes to Vietnam, which is the second main destination for South Korea exports, the yearly rise in Q1 is much more conspicuous than that of China. According to statistics, PP exports to Vietnam more than tripled while PE exports also soared by 120%, both on a yearly basis.

Now that China has been grappling with extended lockdowns since early April and demand for imports is at a stalemate due to lower consumption and port congestion, South Korea is increasing its focus on its second main route, Vietnam, to shift exports.

HDPE & LLDPE stand at least $30/ton below Mid-East; bm moves below $1300

Middle East origin HDPE film offers were standing at $1330-1390/ton CIF SEA, while South Korea offers formed the low end of the overall range of the grade at $1300/ton CIF SEA. HDPE blow moulding offers even showed up below this threshold to be reported as low as $1270/ton CIF. As for LLDPE film, South Korea was offered at $1330/ton CIF SEA, standing $30-60/ton below the Middle East assessment.

A Vietnamese trader who reported receiving these competitive PE offers for South Korea origins said, “We have got a lot of offers from South Korea this week, and they are more competitive when compared to Middle East origins. We are not inquiring about Russian or US cargoes due to long shipment processes. We think prices still have room for additional losses, so we’ll remain on a wait-and-see stance.”

PPH is at par with China

South Korea origin of raffia and inj. offers were also reported at $1300-1320/ton CIF SEA, almost at par with China origins, which were reported at $1300/ton CIF SEA. Middle East offers, meanwhile, were standing at $1330-1380/ton CIF SEA.

Another Vietnamese trader reported that offers they received for China-origin raffia offers were down by $80/ton from mid-April levels to $1300/ton CIF and said, “We expect PP to drop further due to weak demand conditions across Asia markets. China’s Covid-19 lockdowns continue and there is a Ramadan lull, which will be followed by the Eid holidays.”

May outlook bearish, competition likely to remain in place

The Eid festivities in early May are likely to keep the regional market activity subdued, and with the holiday lull to linger during the first half of the upcoming month. China’s absence for the most part of next week due to the long Labor Day holidays is also highly likely to be felt across the region.

Lower May PP and PE offers from both regional and overseas producers to the regional markets have also signaled further bearishness and a potential increase in competition.