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Divergent factors affect SE Asia’s November PP outlook

  • 24/10/2016 (03:38)
Southeast Asia’s import PP markets have been on a stable to firm note for the last couple of weeks on the back of a strong post-holiday outlook in China amidst soaring energy markets. As the end of October approaches, players are at odds about the November outlook given contradicting factors such as planned shutdowns at some PP plants on the one side and upcoming restarts in Asian propylene markets on the other.

In operation news, market sources reported that India’s Reliance Industries Limited (RIL) is planning to shut its PP plant at Jamnagar, Gujarat by mid-November for a planned turnaround. The 2.03 million tons/year PP plant is expected to remain offline for 25 days. The PP lines will reportedly be shut one after the other so that operating rates will be at about half capacity during the shutdown.

PP players across the regional import markets voiced firm expectations for November based on the Indian producer’s approaching production shutdown. A trader stated, “Although the producer’s plant will be shut for only a short period, its impact on import PP prices to Southeast Asia is likely to be significant during November due to its huge capacity. Plus, surging energy markets will remain as another factor to help the market maintain its firm sentiment.”

Within the region’s local markets, some producers’ upcoming shutdowns in November are also supporting players’ firm expectations. A source from Indonesia’s Chandra Asri reported that they are planning to halt production at their PP plant for maintenance in November. The plant houses three production lines, each of which is able to produce 160,000 tons/year of PP while it is slated to remain offline for two weeks.

A trader based in Indonesia stated that they aren’t giving any PP offers for the moment due to the local producer’s upcoming shutdown which is likely to push the market higher in November. A woven bag manufacturer in the country commented, “We might see further increases on PP prices in November given the planned maintenance shutdowns. However, we don’t think that prices would witness drastic changes since demand is not that strong.”

A few players in Thailand claimed that the overall polyolefin production will be reduced in the country due to SCG Chemical’s planned cracker shutdown in November. “We expect a bullish outlook, especially for PP, next month,” a seller based in Thailand opined.

Meanwhile, Philippine Polypropylene Inc (PPI) was reported to encounter a machinery problem at its 160,000 tons/year PP plant. Players stated that the producer is expected to restart its production by the end of October.

On the other side of the coin, there is a contradicting factor which might counterbalance the impacts of limited supplies in the regional PP markets. According to ChemOrbis Production News, several Asian propylene plants are slated to be restarted in the October-November period. Propylene sentiment has already shifted amid ample supplies in the region, with spot prices recording some visible drops over the past week.

South Korea’s SK Global Chemical is planning to restart its No 2 cracker with 350,000 tons/year propylene capacity in Ulsan on October 26. The cracker was shut for maintenance on September 17. In Japan, JX Nippon & Oil’s olefins conversion unit in Kawasaki is slated to resume operations by mid-October. The unit is able to produce 140,000 tons/year of propylene. The producer is also planning to restart its No 2 fluid catalytic cracker with 90,000 tons/year of propylene capacity in early November.

As opposed to firm expectations for the November PP outlook, some players argue that the upcoming PP shutdowns should also exert downwards pressure on the propylene market since there will be less consumption. In this case, the demand status for PP will play an important role in shaping the future trend.
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