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SE Asia import PP prices under pressure from China; price correction looming

by Merve Sezgün - msezgun@chemorbis.com
  • 24/12/2020 (04:03)
Southeast Asia’s import PP markets had been on the upswing since early May if a three-week correction period in August is disregarded. Last week, prices stabilized at a more than two-year high amid signals that sentiment in China was faltering. Despite tight supply, a price correction is looming on the horizon considering the year-end lull and lackluster regional demand.

CIF SEA raffia prices stand notably above China

Data from ChemOrbis Price Index reveal that the weekly average of homo-PP raffia prices on CIF SEA basis has been standing $160-170/ton above CIF China prices since three weeks ago. This is the largest price gap between the two markets since ChemOrbis began keeping records in 2008.

The unusually high premium that Southeast Asia is carrying over China has been exerting pressure on homo-PP prices on CIF SEA basis. Buyers in the region have either retreated to the sidelines or kept their purchases to a minimum in anticipation of seeing downward corrections in offer levels.

“CIF SEA prices may come off to restore the balance with China at some point,” a buyer said.

Meanwhile, China’s import homo-PP market has been tracking a stable to slightly softer trend since it hit a more than one-year high in late November. Players in Southeast Asia reported that the number of PP offers from China has recently increased and this origin has been offering a competitive edge.

Activity slows down amid year-end lull

In addition to weak signs from China, the year-end holidays have also pushed Southeast Asian buyers to the sidelines.

“Overseas sellers still stand firm on their offers due to ongoing tightness in supplies.

However, demand from the region has waned, and purchasing activity has been quite limited due to the year-end lull,” a few traders commented.

Local prices in Vietnam retreat from multi-year highs

In Vietnam’s local homo-PP market, prices have already witnessed some decreases this week. Thus they retreated from a more than two-year high, according to ChemOrbis Price Index data.

A trader said, “We reduced our offers slightly as demand has faded. Most buyers have taken a wait and see stance since they expect prices to see further downward corrections.”

When compared to last week, homo-PP raffia prices on FD Vietnam basis decreased by around VND500,000-1,200,000/ton ($21-51/ton).

Indonesian producer kept offers stable for 2nd week

Following several weeks of sharp hikes amid tight supplies, a major local producer in Indonesia has been keeping its domestic offers stable for the past two weeks.

“The producer did not change its PP offers for another week, pausing from the consecutive hikes. Domestic demand in Indonesia is weak, as most converters have not been able to pass high PP costs to their end-product prices. Buying activity has been further reduced due to the year-end lull and the latest wave of COVID-19 infections,” a converter explained.
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