Higher Chinese offers nudge SEA PP market toward firmer ground

Over the week ending January 16, Southeast Asia’s import PP market edged up after moving largely sideways for the past four to seven weeks, as firmer offers from China began to lift regional price sentiment. The modest uptick marked a slight rebound from May 2020 lows, though trading activity remained selective.

At the domestic level, PP prices stayed on a firmer footing. Most key markets recorded broadly stable levels during the week, except Indonesia, where prices have been trending higher for three consecutive weeks. In the current week, domestic PP offers continued to climb in Indonesia, while Vietnamese players also reported rising local prices. Buying interest showed only tentative improvement overall, with demand still relatively sluggish as most market participants remained cautious.

Chinese sellers’ firm stance underpins upbeat tone

Chinese suppliers approached the Southeast Asian PP market with a firm stance, lifting offers by $20-40/ton, with homo-PP raffia rising to $820-850/ton CIF, cash. Key drivers behind the higher offers included China’s VAT policy, which pushed up export prices, alongside lingering uncertainties tied to geopolitical tensions.

This approach helped establish a higher reference level for the regional import market. As Chinese prices moved up, the broader import market took cues from the shift. Regular suppliers adjusted offers upward to stay aligned with prevailing levels, reinforcing the firmer tone. As a result, homo-PP offers below the $800/ton threshold disappeared, while PPBC injection prices from South Korea and ASEAN also moved higher.

Higher prices somewhat encourage buying appetite

Higher prices and a firmer market landscape encouraged lent modest support to buying interest across Southeast Asia. Some converters stepped in to secure near-term requirements, concerned that further delays could expose them to risen resin prices.

A trader opined, “Buyers are increasingly concerned about the possibility for further upswings and began stepping up purchases. Thus, demand this week improved compared with last week.” Meanwhile, a Vietnamese converter noted, “Local PP prices have yet to rise, but import PP offers from China climbed by around $20/ton this week. To hedge against potential hikes in the domestic market, we replenished some shipments locally.”

However, the revival of buying enthusiasm remained limited in scope. Buyers continued to focus on small volumes, prioritizing just-in-time procurements, whereas many of them still stayed on the sideline. Overall demand conditions therefore stayed largely stagnant. This cautious behavior constrained deal flow and capped the upside momentum, despite sellers’ confidence.

Domestic prices also on firm notes

Within the region, Indonesia has led the uptrend, while Vietnam has lately seen a firmer market tone. A major Indonesian producer raised domestic PP offers for the third consecutive week. In the current week, prices increased by IDR100,000/ton for BOPP film and homo-PP raffia and inj., IDR110,000/ton for homo-PP film, IDR290,000/ton for PPRC inj., and a notably sharper rise of IDR700,000/ton for PPBC inj. grade. The repeated hikes reflected producers’ confidence and better fundamentals for PP.

In Vietnam, domestic PP prices were largely stable last week despite some hike attempts on the back of import spillover effects. Expectations for higher prices strengthened, driven by rising import prices, particularly for Chinese-origin material. Early this week, domestic prices reportedly moved up, with homo-PP raffia quoted at VND24,000,000-24,500,000/ton.

A local trader commented, “Local prices have been on an upturn since last week and continued to move up further this week.” He added that he has had enough inventory to cover requirements until the end of March and is not in a hurry to replenish, preferring to stay on the sidelines. He added, “Current prices are too high to accept, while the market trend in February and March remains unclear.” This reflected broader market sentiment, where higher prices have not yet translated into a meaningful recovery in demand.