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Turnarounds keep PP supply tight in SE Asia

by Abdul Hadhi -
  • 21/07/2020 (04:06)
Tight supply in Southeast Asia has kept the import PP price uptrend intact, thanks to a number of maintenance shutdowns. According to ChemOrbis Price Index data, the weekly averages of import PP prices have been gaining for 12 weeks, with PPH raffia up 20% from early May at $975/ton CIF SEA while PPBC has risen 19% to $1005/ton.

“There continues to be a shortage of PPH which has pushed offers higher,” a source at a Singapore-based trader said.

A number of plants are already undergoing turnarounds. These include IRPC’s 775,000 tons/year plant in Thailand and Pertamina’s 45,000 tons/year unit in Indonesia. Meanwhile PRefChem’s 900,000 tons/year PP plant in Malaysia is only due to restart in September after an extended shutdown after a fire in March.

Regional producers start to reveal August offers with hikes

Meanwhile, traders reported that a Southeast Asian producer announced its August PP prices to Indonesia with increases when compared to July.

The producer lifted its new PP offers by $40/ton for homo-PP raffia and inj. and film, and by $70/ton for fibre. As for copolymers, new offers increased $40/ton for PPRC inj. and blow moulding, and by $50/ton for PPBC inj.

The producer’s hike decision was mainly attributed to the ongoing tightness as well as the firming trend in China’s import polyolefin markets.

Taiwan refinery fire may further raise feedstock cost

In addition to tight supply, PP prices are also being supported by costly feedstock.

Spot propylene prices have been climbing from late May, rising 8% to $780/ton FOB Korea from $720/ton. Among the turnarounds affecting propylene supply in Northeast Asia are Maruzen’s 280,000 tons/year unit and MItsubishi Chemical’s 270,000 tons/year plant - both in Japan.

A refinery fire last week in Taiwan could potentially push propylene even higher. “The Formosa refinery fire has affected market sentiment but it will take some time to see the effect on propylene prices,” a source at a global producer said.

The fire was at Formosa Petrochemical Corp’s 540,000 barrels/day refinery in Mailiao, Taiwan. The N0.2 residue desulphuriser (RDS) unit at the refinery was shut after the incident.

Formosa had earlier planned scheduled maintenance at its 1.2 million tons/year Mailiao cracker in August, according to the ChemOrbis Production database.

Spillover sentiment from PPH non-woven interest

Apart from tight supply and rising production costs due to firmer feedstock propylene, PP prices have also benefited from spillover sentiment stemming from good demand for PPH non woven material.

Non woven fabrics are used to make medical products such as masks and protective suits, which have seen increased demand amid efforts to reduce the spread of the COVID-19 pandemic.

As more countries come out of lockdowns, fears of a second wave of infections have prompted even more demand for PPH masks.
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