PP uptrend falters in Indonesia amid downstream resistance
From $1063/ton FD Indonesia in mid-July, domestic homo-PP raffia prices have declined to $1010/ton currently - a fall of 5%, according to ChemOrbis Price data. Domestic prices have been moving up from around $860/ton in late April/early May.
Import prices, meanwhile, moved down to $975/ton CIF Indonesia from $990/ton last week. Similarly, import prices had been gaining from around $785/ton in late April.
“Domestic demand has not been able to keep up with the pace of polymer feedstock hikes and buying resistance has been clearly seen. Converters simply cannot reflect higher feedstock prices to their end users in the downstream markets. Import prices have eased a little too,” an Indonesian end-product maker explained.
Reflecting the changing mood, an Indonesian producer started lowering domestic PP offers from last week after almost two months of mostly raising them.
COVID-19 second wave concerns may slow recovery
Adding to buyers’ resistance to price hikes have been concerns over fresh COVID- 19 infections and the possibility of renewed lockdowns.
Much of the price gains from May has been attributed to expectations of improved demand and price recovery as Indonesia came out of the lockdown, along with other countries in the region.
However, such expectations have been dented by the recent increase in infections which prompted authorities in Jakarta - the country’s populous capital - to delay a plan to further relax social distancing measures until August 13. Offices, restaurants, shopping malls and places of worship have been allowed to reopen with some limits.
Support from turnarounds, upstream
Nonetheless, PP prices may derive some support from supply limited by turnarounds.
“PP prices have been supported by a continuing tightness of regional supply while feedstock naphtha remains firm,” a regional trader said.
Among those undergoing turnarounds are IRPC’s 770,000 tons/year plant at Map Ta Phut in Thailand and Pertamina’s 45,000 tons/year unit at Plaju in Indonesia. Meanwhile, PRefChem’s 900,000 tons/year plant is not due for a restart from maintenance until September.
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PP prices are also receiving upstream support, with naphtha prices on CFR Japan basis rising moderately from $386/ton in mid-July to $394/ton lately.
Meanwhile, PPH prices continue to benefit from spillover sentiment from demand for PPH non-woven, which is used in the manufacture of medical masks. Demand has grown even stronger for medical masks in the region and globally amid the fresh wave of COVID-19 infections.
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