How much steeper is the fall in PP than in PE across Asia and Mid-East?

Players across Asia and the Middle East have been regularly reporting that activity in the PP market has been more sluggish than the PE market recently and that therefore, PP prices have lost more ground when compared to PE. ChemOrbis Price Indices also confirm these comments, not only suggesting a larger loss for PP for all regions but also a steeper fall for Asia with respect to the Middle East for both products.

In China, ChemOrbis Price Index shows a loss of 38% for import PP since the downturn kicked off in mid-May. Meanwhile, average import PE prices lost ground by 22% for HDPE and LDPE and 26% for LLDPE, according to ChemOrbis Price Index.

In Southeast Asian PP and PE markets, a similar situation is in place with import PP recording an average decrease of 38% within the same timeframe while the downturn in PE was relatively slower. Spot import PE prices lost ground by 22% for LDPE, 24% for LLDPE and 25% for HDPE film on average, according to ChemOrbis Price Index.

When looking at Middle Eastern markets, the region’s largest spot market, Turkey, saw a cumulative decrease of 33% on average both for import PP raffia and fibre since early May, when the downturn first started. In the same period, Turkey’s import PE market posted a decrease of 21% for LLDPE, 23% for HDPE film and 24% for LDPE film on average, according to ChemOrbis Price Index.

As another benchmark for the Middle East, the United Arab Emirates saw a cumulative loss of 32% in import PP prices since mid-May, according to ChemOrbis Price Index. In the import PE market, the losses were much smaller, with LDPE falling by 21%, HDPE by 22% and LLDPE by 18% on average in the same timeframe.

There was a short-lived upturn in October upon tightening supplies in the Middle East, particularly in Turkey. Nevertheless, the regional markets had to yield to the downward pressure from China in the following months. This brief, albeit unsustainable, firming trend helped cut the speed of the downturn seen in the Turkish market.

What lies behind the larger losses seen across the board for PP prices is the increasing self-sufficiency of China through the successive start-ups of new coal based PP plants, which have contributed to year over increase of 20.9% in China’s November PP production. For PE, by contrast, the yearly production increase from China was reported at a more modest 8.48%.

The fact that spot ethylene has been trading at par or even above import PE prices in Asia for the past one month is also contributing to the relative strength of PE with respect to PP. The spot ethylene market’s ability to maintain steady pricing despite plummeting energy costs has hindered larger losses in PE, many players concur.