Re-emergence of Russian PP, PE cargoes dents sentiment in Vietnam

Vietnam’s import PP and PE markets were firm during the final week of March, finding support from high costs. This was despite persistently weak demand as well as the existing pressure from the re-export cargoes from China. However, the sentiment has stalled again in early April amid the re-emergence of Russian cargoes at competitive levels.

A trader reported receiving PPH raffia and HDPE film offers at $1355/ton, and LLDPE film at $1385/ton, all on CIF Vietnam, cash basis. “We have received some PP and PE offers directly from Russia, they are not re-export cargoes from China. But still, the payment and shipments need to be conducted by third parties mostly through China due to sanctions on Russia.”

Payments and shipments for Russian cargoes are through China

Another trader also reported that offers they received for RussianPP and PE were standing at $1355/ton for PPH raffia HDPE film, $1385/ton for LLDPE film, $1380/ton for PPH non-woven, and $1345/ton for PPH inj., all on CIF Vietnam, cash. These offers stand below Middle East origin offers by $35/ton for LLDPE film and $45-65/ton for HDPE film.

He said, “Both local and import PP, PE prices in Vietnam have moved down around $20-30/ton compared to last week. Russian cargoes are offering a competitive edge and cargoes from Russia to Vietnam are shipped through China mostly due to sanctions on Russia following the Ukraine invasion.”

PP, PE markets already under strain from China exports/re-exports

Vietnam’s polyolefin markets have already been one of the most preferred destinations of Chinese suppliers to relieve their supply pressure, considering weak demand conditions driven by the latest Covid-19 wave in the country.

Shipments from China are problematic

Regarding re-export offers from China, traders added, “Currently, there are a lot of re-export materials from China, and they are undercutting other regular origins by $20-30/ton. However, buyers are concerned about delayed shipments due to the lack of ships and containers when it comes to source from China."

S Korea origin PP offers also move lower

South Korean PP suppliers have also offered near the low end of market levels this week, although they maintained their bullish stance in the previous weeks despite Chinese sellers’ aggressive stance.

A converter reported receiving South Korea-origin PPH raffia and inj. offers at $1350/ton CIF, cash, and said, “A South Korean producer has suddenly applied significant decreases on their offers this week as they want to clear stocks. But the market is still quiet, with buyers just standing on a wait-and-see position.”

Weak demand persists for both PP and PE

Demand has been weak across the regional markets as higher inflationary pressure and rapid changes in energy prices have kept buyers cautious about their purchases. The Ramadan dullness has also kicked off in Malaysia and Indonesia.

Regarding the market conditions, traders also added, “Demand for HDPE and PP is a lot weaker when compared to LDPE and LLDPE. Adding to the slow recovery after Covid-19 were high inflation rates and firmer energy costs.”

Local PP extends losses into 2nd week in Vietnam

Despite the firming trend across import PP markets, local PP prices in Vietnam headed south over the past week mainly due to weak demand.

Prices have remained on the same route this week to fall at around VND34,500,000-35,000,000/ton ($1373-1393/ton) FD Vietnam, cash. The total loss in prices was around VND500,000-1,000,000/ton ($22-44/ton) since late March, meanwhile.