Weak demand casts a pall over China, SE Asia PP markets

Over the week ending on November 8, import PP prices in China and Southeast Asia tracked a stable-to-softer trajectory after weeks of gains, while local markets offered a mixed bag. Despite firm propylene prices and rising ocean freight costs lending some cost support, many sellers took a step backwards because of sluggish demand across Asia’s PP markets.

In the meantime, the weakness in demand, accompanied by uncertainties in crude oil markets, cast a shadow over market sentiment, leading some participants to anticipate stagnation or even further declines in prices.

China’s import prices drop for first time since mid-Sep

In a weekly comparison, a Taiwanese producer issued slight downward adjustments, causing the high end of China’s PP import ranges to slip for the first time since mid-September, while offers for Middle Eastern origins were stable at the low end of the ranges. As a result, the overall import offers were assessed at $870-940/ton for homo-PP raffia and inj. and $900-970/ton for PPBC inj., both on CIF China, cash.

A source from the producer noted, “Demand in China has tapered off, as converters have already restocked over the past couple of months. Even with recent monetary policy measures by the PBOC, actual demand hasn’t met expectations. Earlier price hikes indeed spurred some buying activity; overall demand remains low.”

“Buying activities are limited amid a muted market environment. Bearing cost pressure in mind, some producers aimed for rollovers at the beginning of the month, but actual demand is stagnant given dimming confidence among downstream buyers,” said a trader.

Import sellers apply rollovers to decreases in SEA

Southeast Asia saw import homo-PP raffia and inj. prices stabilize in the second straight week, to be assessed at $950-990/ton CIF SEA, cash. As for the PPBC injection, the overall price range was assessed stable to $20/ton lower from a week earlier at $990-1060/ton with the same terms. Weekly average data from ChemOrbis Price Index indicated that raffia prices hovered around a two-and-a-half-month high, while PPBC prices eased from their highest level since early August.

Players reported a tug of war between sellers and buyers across the regional markets, with a source saying, “PP prices are mostly stable. Several sellers hold firm on to their pricing with a lack of willingness to offer discounts. In the meantime, demand is subdued since buyers show low enthusiasm at building up inventory.” Despite this resistance, the balance seemed to shift slightly in buyers’ favor as some price drops were applied.

As a side note, ChemOrbis data show that Southeast Asia’s import homo-PP raffia and inj. price continued to trade $35/ton above domestic prices in China after regaining its premium two weeks ago, despite some upticks inside the country.

Local prices exhibit diverse directions

In China’s domestic markets, PP prices rebounded slightly with rollovers to increases of CNY50-100/ton ($7-14/ton) following a three-week slide. High costs, a positive macroeconomic outlook, and reduced inventory at home revived sellers’ confidence, though tepid buying interest prevented them from introducing larger hikes. The Philippines saw local prices climb, as converters restocked ahead of year-end festivities. Meanwhile, in Indonesia, a major domestic producer hiked PP offers as of November 11 after keeping them stable for seven consecutive weeks.

In contrast, local prices in Vietnam saw slight declines last week in the face of tepid demand, with buyers adopting a cautious stance amid broader economic concerns. A Ho Chi Minh City trader shared, “Vietnamese players are taking a wait-and-see approach due to uncertainties, including potential US-China sanctions and possible trade impacts from recent elections.”

SE Asian players keep an eye on Chinese-origin supply

In the past weeks, players participating in Southeast Asian markets reported fewer offers from China, while Chinese exporters continued to struggle with competition from other origins, high freight rates, and currency fluctuations. However, the flow of Chinese cargoes into the region remains under close watch.

Considering scheduled maintenances at several PP units, Chinese producers have been able to keep availability under control lately. As per ChemOrbis Production News Pro, massive capacity additions of 4.05 million tons/year have been scheduled to come on stream by the year-end, which are likely to shift China’s supply landscape in the next few months.

This might not only exert pressure on the country’s domestic markets but also prompt Chinese exporters to divert excess supply to other destinations, particularly neighboring Southeast Asia given freight advantages. A Ningbo-based trader commented, “Exports to distant regions like Africa and South America are challenging due to increasing freight rates. When compared to other Asian markets, shipping costs to these outlets are much higher, while lead time is longer.”