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Will re-export PP from China continue to find a home in SEA?

by ChemOrbis Editorial Team -
  • 02/04/2015 (18:13)
PP prices in the Chinese market have firmed up this week as several weeks of re-export activities and some production shutdowns within the country have helped to overcome worries of oversupply stemming from China’s significant capacity additions. Southeast Asia has provided a good outlet for Chinese re-exporters recently as availability in the region has been tight and homo-PP prices on a CIF SEA basis have trader with premiums of up to $125/ton over CFR China prices, according to data from ChemOrbis Price Index.

Although prices in China are now gaining ground and oversupply worries are fading, traders in China are still offering re-export cargoes to the Southeast Asian market. “Re-export business to Southeast Asia is still going on, but we are concerned that demand from Southeast Asian buyers may soften in the weeks ahead as the volume of re-exported goods from China will begin to lessen availability problems in the Southeast Asian region,” a Chinese trader stated. Another trader added, “Re-export activities to Southeast Asia for the past few weeks have helped sellers pare down their excess stocks, but we are concerned that Southeast Asia is nearing a saturation point and that future re-export deals may become more difficult.”

Chinese traders are currently offering re-export homo-PP cargoes at $1280-1300/ton FOB China, cash, which could potentially be offered to SEA at around $1300-1330/ton CIF. These prices would be within the current import offer range of $1260-1360/ton CIF SEA, indicating that while re-export deals from China remain feasible, prices for Chinese re-exports are no longer quite as attractive for Southeast Asian buyers as has been the case over the past few weeks.
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