Vietnam’s local homo-PP market retreats for 3rd week on subdued demand

In Vietnam, local homo-PP prices have been witnessing reductions since after the market hit a more-than-two-year high in mid-December while waning demand is the main driver of this downturn. Two factors have weighed on buying interest recently: softening sentiment in China and reduced end-product manufacturing at home.

“Buyers stay mostly sidelined or limit their purchases in anticipation of seeing further decreases in the near term,” noted players.

The import market, meanwhile, is stuck between soft signals from China and the firm stance of Middle Eastern suppliers.

Local prices down 4.5% in 3 weeks; imports mostly stable

According to data from ChemOrbis Price Index, the weekly average of homo-PP raffia prices on FD Vietnam basis has witnessed a loss of 4.5% since the downturn began three weeks ago. Prices are currently reported at VND31,500,000-32,500,000/ton ($1240-1279/ton) on an FD, cash basis.

In the meantime, import PP raffia prices into Vietnam have been tracking a largely stable to slightly softer trend. Although most overseas suppliers are trying to maintain a firm stance on their offers amid their limited allocations and high freight costs, they face pressure from a rising number of competitively-priced Chinese offers in the Vietnamese market.

A converter said, “We received a PP raffia offer from a Middle Eastern supplier at $1220/ton CIF at the start of the week. The producer revised its offer to $1250/ton today, pointing to limited supply and higher freight. The market is stuck between Middle Eastern suppliers’ firm stance and the softening in China.”

This week, a limited number of homo-PP raffia offers for Middle Eastern origins were reported at $1220-1250/ton CIF Vietnam, cash. Offers for Chinese material, meanwhile, stood at $1170-1210/ton on similar terms.



Competitive PP offers from China increase in number

For the past couple of weeks, players in Vietnam have reported an increasing number of homo-PP offers from China at competitive levels.

A trader commented, “Offers for Chinese origins are quite competitive, and we have received fresh offers from the country with further drops this week. Some South Korean suppliers have also reduced their offers amid the pressure from China. However, offers for Middle Eastern origins are still stable.”

Several sellers based in Vietnam noted that buyers prefer to stay sidelined in anticipation of seeing price reductions for all origins over the short term.

Lack of vessels hit exports: Converters reduce operating rates

Rising freight costs and a lack of vessels keep PP offers for Middle Eastern origins at high levels. On the other hand, they lead to a slowdown in manufacturing.

“Many converters have had to reduce their operating rates as they cannot find containers to ship their end-products. Domestic demand is also weak. On top of that, they have been facing multi-year-high prices when buying PP, their raw material,” a PP bag manufacturer noted.