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PP markets in China, Vietnam hit 3-year lows, readying to test new lows

by Esra Ersöz -
  • 24/05/2023 (02:05)
The PP price rout, that has been in place since February across Asia, has deepened recently with the weekly averages of ChemOrbis Price Index hitting their lowest for the past three years both for China’s local and import markets. Exports from China have also weighed further down on Southeast Asia recently, pulling Vietnam’s import PPH market down to its 3-year lows.

Now that China’s long-heralded recovery has failed to materialize and supplies continue to grow domestically, the recent slump below the $900/ton threshold for homo PP raffia is well justified, according to players.

ChemOrbis Production News Pro suggests that there will be 2 million tons of new PP capacities scheduled for May, if not delayed, on top of the already commissioned capacities of 1.8 million so far this year.

Needless to say, these relentless capacity additions contribute to the mounting stock pressure inside the domestic market, where the weekly average prices also have reached their lowest since May 2020, based on ChemOrbis Price Index.

China’s local and import markets trade almost at par

As can be seen from the Price Wizard Graph below, the USD equivalence of weekly average prices for local PP raffia, when VAT is excluded, almost matches the import price average in China. Therefore, buying interest remains quite dull for imports, with buyers preferring to meet their already restricted needs from the local market amid economic woes.

PP – Raffia – Import – CIF – Local - Exwarehouse

Vietnam PP market continues to feel the brunt of aggressive China exports

Vietnam is sure to have the Chinese PP at quite competitive prices given its proximity. This week, Chinese PP is offered at $930/ton CIF, marking the lowest levels seen in the last three years at the time of press, as is the case in the rest of the markets.

A trader based in Ha Noi said, “We have only received PP offers for Chinese origin this week. It seems other origins cannot compete much in Vietnam.”

There is little hope for a demand recovery over the short term among players. Thus, this makes Southeast Asian buyers wait for further slide in prices.
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