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SE Asian PP lifted by supportive supply-demand fundamentals

by Shibu Itty Kuttickal -
  • 28/09/2021 (03:08)
The PP markets in Southeast Asia are on the mend as suppliers have adopted a firmer stance on their prices amid higher costs, tighter availability as a result of scarce import arrivals, and most importantly, signs of a demand recovery.

The latest rise in PP prices, mostly at the high end, has come after four weeks of stability. Meanwhile, import offers from mainland China have risen on the back of the latest power curbs in the country.

The latest price indications show that the rising trend noted in the previous week is continuing. The ChemOrbis assessments made on September 23 show the overall range for import homo-PP raffia prices as stable to $10/ton higher from the previous week at $1180-1270/ton on CIF Southeast Asia, cash basis. PPBC injection prices for all origins were also stable to $10/ton higher at $1230-1320/ton CIF, cash basis.

Import availability has been tight

Import arrivals into Southeast Asia have been scarce as a result of the shortage of vessel space and containers in the region. “Import pricing has also faced upward pressure from higher costs in the form of rising feedstock and freight prices,” said an Indonesian converter.

A Singapore-based trader quoted import prices of PP block copolymer into Southeast Asia early this week as having risen by $30-45/ton and the other grades by $5-20/ton.

Prices from China rise amid energy caps

The power curbs in China and the resultant possibility of a fall in output has resulted in import PP prices from the country rising. PP prices in Vietnam have tracked the upturn in China.

“A major producer in China raised import PP prices by $40/ton,” reported a converter last week in Vietnam, a country that often reacts to economic news in China faster than other SEA countries because of its sheer proximity to the Chinese mainland and strong commercial ties.

Regional demand starts to improve

A Vietnamese trader agreed early in the week that demand for imports has strengthened. “Local prices have also firmed and we have bought some PP,” he said. Added a converter, also Vietnamese, “Demand is back, albeit slowly. We are buying as prices are rising and we expect prices to stabilise or rise further.”

There is a sense in Southeast Asia that demand recovery is round the corner amid hopes of COVID-19 restrictions being eased.

“We expect demand to improve as economies are being opened up and people will be back to work. Demand is expected to improve in Malaysia, where more sectors are being allowed to reopen,” said a Malaysian producer last week.

An Indonesian converter pointed to “tightening supplies and improved demand” for PP packaging. “We expect lockdowns to be eased shortly and that would have a positive impact on the market going forward,” he said.

The improvement in sentiment is reflected in the latest domestic pricing notifications of an Indonesian producer, which raised offers of PP block copolymer film by 3% and the rest of its PP grades by 1%.

“Nobody likes to be caught with lower stocks when prices rise,” said a Thai trader. “Traders and converters are currently bargain hunting as well as topping up inventory levels, just in case they are caught short in a rising market,” he added.
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