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Overseas PP producers’ focus shifts to SE Asia as Chinese demand fades

by Merve Sezgün -
  • 04/11/2020 (04:03)
China’s PP appetite has started to decrease as the high season is over. Import prices into the country have remained largely stable so far this week, while overseas producers have shifted their focus to Southeast Asia where supplies are tighter and price levels are higher.

Last week, the weekly average of import homo-PP raffia prices for overall origins reached its highest level since August 2019 to be quoted at $1010/ton CIF China, cash. Southeast Asia’s import PP raffia market, meanwhile, hit a one-year high at $1050/ton CIF.

Has China’s import PP market reached its peak?

Players have been discussing the sustainability of the upward trend in China’s import PP market since last week, and questioning if prices have reached their peak levels or not.

According to several players, prices should stabilize at their current levels before they witness a possible trend reversal in November amid expectations of a supply increase on the heels of new capacity additions.

A trader said, “PP sentiment has been faltering since a few weeks ago. We think that prices have already hit the peak level. As the current offer levels are too high to see acceptance, demand remains limited to buyers’ needs. With the high season stretching from September to October coming to an end, we don’t expect to see strong demand in the near term.”

So far this week, import homo-PP raffia prices on CIF China basis have largely hovered around last week’s levels.

In the local market, however, major domestic producers increased their PP offers due to surging Dalian futures this week.

“The recent hikes in domestic PP offers have received very limited response from buyers.

The upcoming new capacities are clouding the near-term outlook. The high season is over, and we believe that buyers will not be so enthusiastic about purchasing beyond their urgent needs,” commented a seller.

Tightness keeps SEA PP firm, demand cautiously improves

Players reported that both local and import PP prices continued to move higher this week due to tight supplies stemming from plant shutdowns in the region.

An Indonesian producer increased its domestic PP offers for the 10th consecutive week, pointing to tight availability.

Traders in the country also said that demand was gradually improving amid restocking activities. “Buyers are willing to make fresh purchases at the current high prices as they fear that tightness may push the market even higher,” a trader noted.

Meanwhile, a PP bag manufacturer in Vietnam said, “Last week, we purchased a limited amount of Saudi raffia at $1040/ton CIF, while the same supplier informed us that they had no additional allocations for us. Demand towards our end products is good, meanwhile.”
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