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Vietnam PP markets at more than 4-month lows, buyer-seller tug of war intensifies

by Merve Sezgün -
  • 04/12/2023 (01:41)
PP prices in Vietnam have remained on a stable to lower trajectory since late September or early October, as subdued demand amid slowing downstream businesses have pushed sellers to cut offers consecutively over the period. Although the general buying sentiment remains subdued, sellers appear increasingly reluctant about making further decreases, signaling an intensifying tug of war ahead.

The import homo-PP raffia market broke below the $900/ton CIF threshold during the week ended on November 24, with some deals for South Korean shipments being concluded at $880/ton. Since then, the low end of the market has stabilized.

Import raffia down 11% since late Sep, locals drop 8%

As per data from ChemOrbis Price Index, the weekly average of homo-PP raffia prices for all origins has experienced a cumulative decline of 11% since the downward trend kicked off in late September. As for locals, the market has lost a total of more than 8% over the period.

As a result of the slower pace of declines, the local market has regained its premium over the imports since early November. The gap between the CIF market and the FD market (excluding VAT) is now around $10-15/ton, according to ChemOrbis data.

Both markets currently stand at more than four-month lows.

Vietnam – homo-PP

Trading activity limited; buyers shy away from high-end offers

Last week, few homo-PP raffia deals were reported in an $880-900/ton CIF band mostly for South Korean shipments. Chinese offers, standing at around $950/ton, were deemed too high by buyers. To mitigate the risk of fluctuating currency rates, most converters continued to fulfill their immediate requirements locally.

“Demand across downstream sectors shows no recovery, hence buyers are not in a hurry to replenish. Few people were interested in Korean material due to the relatively competitive price. But, in fact, they expect prices to fall further,” a trader said.

In addition, there is an expectation among buyers that the number of Chinese offers might increase in December and that Chinese sellers may approach the market with lower prices to compete with other origins. “If happened, it could hit sentiment further,” a buyer noted.

Sellers hesitant to make further cuts

In the meantime, sellers were not willing to give any extra discount last week, according to players in the country.

“Similar to converters, sellers are adopting a “wait and see” approach nowadays. They hold the belief that regardless of the price, it may not stimulate increased buying interest. There is no point in applying further price cuts for the moment. Plus, they are not willing to compromise their profit margins further, especially considering that costs remain firm despite a slight decline in spot propylene,” a trader commented.

There is a consensus among both buyers and sellers that PP demand will not surge ahead of the year’s end in Vietnam. However, the ongoing weakness in demand and sellers’ efforts to establish a price floor could lead to an intensified tug of war between the two parties.
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