PP prices fall to year-to-date lows in Vietnam

A bearish wind has continued to blow across Vietnam’s PP markets, with prices having tracked a stable-to-lower trend since June, mainly due to poor supply-demand fundamentals. In the meantime, most players have shown a lack of confidence in the short-term markets, indicating a likelihood of an extended downtrend.

Prices reach lowest level since Jan; China loses competitive edge

As for the week ending on August 9, import homo-PP raffia and inj. prices for all origins were assessed stable to $10/ton lower from the previous week at $950-990/ton CIF Vietnam, cash.

Notably, Chinese cargo has continued to lose its competitiveness when compared to other origins, given the escalated shipping costs from the country. Along with offers for South Korean materials, Chinese offers were noted on the high end of the range, whereas Middle Eastern origins formed the low end.

Inside the country, domestic prices also recorded additional weekly losses of VND300,000-700,000/ton ($12-28/ton), to be assessed at VND26,800,000-27,500,000/ton ($969-994/ton) FD Vietnam, cash including VAT.

Data obtained from ChemOrbis Price Index reveals that the weekly average level of import PP prices dropped to its year-to-date low, while the local price in USD was standing at the lowest point since late January.



Weak market conditions still take center stage

The country’s PP markets have continued to grapple with faltering demand, which has been mainly attributed to the current downhill movement. Downstream factories have underperformed due to the low season and weak economic growth across Southeast Asian countries, leading to lower consumption of retail goods across key industries such as automotive, IT, and real estate. As a result, PP converters have either made purchases on a need basis or stayed sidelined.

Adding to weak derivative demand have been high freight rates and buyers’ preference for local cargoes, which reduced demand for imported products. A converter based in Hung Yen commented, “We replenished in the last few weeks, so we’ve had inventories on hand, and we do not feel the urge to buy at the moment. Demand for imported PP is sluggish due to strong shipping costs.”

Meanwhile, a supply overhang caused by plant restarts following maintenance turnarounds in the region and nearby China has kept PP prices under pressure. Vietnamese producers’ inability to export materials has also contributed to an excess of supply at home, further dampening the market. “Local producers are struggling with exports, so local PP becomes more competitive due to ample availability. This makes domestic PP prices drop further on a weekly basis,” a trader opined.

Players foresee continuous downturn ahead

Considering sluggish demand and rising supply, the outlook for Vietnam’s PP markets remains gloomy, with market participants expecting additional room for decreases. “PP is trading on a soft note. Buying enthusiasm is quite bad, and players are worried prices could drop further, so they are keeping away from committing to any shipments,” said a Hanoi-based converter.

Meanwhile, a packaging manufacturer noted, “We expect the current downswing to continue, so we prefer to stay in a wait-and-see mode. Demand for our end products is weak because of the off-season and a broader scenario of a weak economy.”