Vietnam’s PP markets fall to lowest in around 4 months

A double whammy of weak demand and ample stocks with traders and converters have resulted in Vietnamese local PP prices sliding in the last three weeks to the lowest in four and half months, ChemOrbis Price Index data show. Affirming the supply pressure inside, Vietnam also saw a noteworthy jump in imports from China this year, according to ChemOrbis Stats Wizard.

Last week, local PP raffia prices were traded at VND25,500,000-25,800,000/ton ($944-955/ton without VAT) FD Vietnam, cash including VAT, with the midpoint of the range down by about 6% from that of levels in the week beginning October 2. The local price levels were at a four-and-a-half-month low. In comparison, the midpoint of the assessed import price range to Vietnam slid by about 4% over the same period, with the levels at $940-990/ton CIF Vietnam, cash, a four-month low.



Supplies stay high

Market players in Vietnam said the key issue in the current market was the lack of demand, as well as ample supplies.

“We used to sell about 5,000 tons every month, but our sales have come down to about 1,500 tons currently. We did buy a lot during June-July stocks that are still in our warehouse. We have reduced purchases to the minimum, but inventories remain high,” a local trader in Vietnam said.

Players wait for still lower prices as European demand stays weak

The demand situation reflects the diminishing run rates at converters in the country, with even the shopping season ahead failing to rev up activity on the factory floor in September and October. In fact, players said demand for the year-end has subsided as European customers will be on holiday for most of December.

“As prices are in a downtrend, we’ll keep staying on the sidelines and wait for the right time and price to buy,” a converter in Vietnam said. “The demand for our products remains weak. In fact, we have sufficient raw material for our requirements till end-November and see no point in replenishing at this point in time,” added another converter in Vietnam.

Availability from China seen rising

Meanwhile, enough supplies were waiting in the wings in China for Vietnamese destinations, which were just 3-6 days sailing away from the mainland. As Chinese domestic demand also remained weak, supplies in the country have increased considerably and shipments have been looking for homes elsewhere.

ChemOrbis Stats Wizard also confirms the mounting supply pressure from China as China’s PP exports to Vietnam grew by 20% to 18,000 tons in September monthly. The cumulative exports, meanwhile, between January and September, soared by 40% year-over-year.

Will rising Middle East conflict support propylene and PP?

At the same time, some players were expecting any widening of the Israel-Hamas conflict to send oil prices surging, which could keep a floor under the prices of propylene feedstock as well as PP. In a situation of depressed demand and ample supplies, this could at best keep prices rangebound, which could lead to more producers cutting run rates at their plants, trying to trim their losses and reduce availability in the larger market.