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Polypropylene (PP) prices journey southward in Asia

31 May 2023 15:00 IST
Polypropylene prices slipped in the Asian region this week.

An industry source in Asia wishing to remain unidentified informed a Polymerupdate team member, "A persistently subdued demand sentiment coupled with surplus product avails in the region proved to be prominent factors in pushing prices lower."

The source added, “Discounted offers from overseas suppliers and a sharp fall in propylene feedstock values further exerted a bearish pressure on prices. The overall market sentiment remains bleak as a weak macroeconomic environment continues to weigh on global PP prices.”

In Far East Asia, PP raffia and PP injection prices were assessed at the USD 840-860/mt CFR levels, both sharply lower by USD (-40/mt) from the previous week. PP film and BOPP prices were assessed at the USD 850-880/mt CFR levels, both week on week decreased by USD (-35/mt). PP block copolymer prices were assessed at the USD 870-890/mt CFR levels, a drop of USD (-35/mt) from the previous week.

In China, PP prices slumped owing to a bearish domestic market outlook. Ex-works prices for PP raffia were assessed at Yuan 7,150/mt in East China, which comes around USD 840/mt after taken into account for taxes, VAT and currency conversion. A producer from South Korea has offered PP Homopolymer grades at the USD 880/mt levels. This would amount to USD 860/mt after discounting a 2.6% import duty.

According to market sources, a weak pricing undertone in the upstream coal, naphtha, and propane sectors acted as a deterrent in spurring the market recovery from sluggish market fundamentals witnessed in April. further preventing the recovery from the market's April's weaker-than-anticipated economic statistics. Even as Chinese exporters responded to the domestic Chinese market price declines and acknowledged the overall lack of demand, FOB China offer prices in the export market were heard to have fallen on the week. Propane dehydrogenation (PDH) plants in China were reportedly running at around 80% of production capacity rates amid an oversupply situation triggering a pricing downtrend. A depreciation in the Chinese Yuan as compared to the US dollar exerted a further bearish pressure on prices.

In Southeast Asia, PP raffia and PP injection grade prices were assessed at the USD 910-960/mt CFR levels, both plunged by USD (-50/-60/mt) from the previous week. PP film and BOPP prices were assessed at the USD 920-970/mt CFR levels, both week on week tumbled by USD (-50/-60/mt). PP block copolymer prices were assessed at the USD 930-990/mt CFR levels, a steep fall of USD (-50/-60/mt) from last week.

In South East Asia, trading momentum in the spot market slowed down this week with converters adopting a wait and watch approach amid a continuing downslide in prices.

According to market sources, the region could witness a surfeit of PP supplies as production levels normalize at a few plants while a few others restart operations and bring up new plant capacities. The No.1 PP plant Malaysia’s PRefChem has been running at normal run rates and also expected to restart its No.2 PP plant soon. Vietnam’s Long Son Petrochemical is expected to start up its 400,000 t/yr PP plant from June. Meanwhile, Indonesia’s Chandra Asri has continued to operate its 590,000 t/year PP plant at 70% run rates on account of issues at its upstream cracker facilities.

In Vietnam, producers from Saudi Arabia, India and South Korea have offered their PP Homopolymer grades in the range of USD 910-960/mt CFR levels for shipment in June 2023. Bidding was heard below the USD 900/mt levels.

In India, PP raffia and PP injection prices were assessed at the USD 940-980/mt CFR levels, both sharply lower by USD (-40/mt) from last week. PP film and BOPP prices were assessed at the USD 960-1000/mt CFR levels, both week on week tumbled by USD (-40/mt). PP block copolymer prices were assessed at the USD 980-1030/mt CFR levels, a steep drop of USD (-40/mt) from last week.

In India, the purchase pulse has decelerated as local trading firms are currently not acquiring fresh inventories and grappling with the task of liquidating excess stockpiles lying in their warehouses. Given that a bearish pricing sentiment pervades the market, the firms may be compelled to sell their inventories at lower than current market prices and incur a loss. Even as converters make only need-based purchases, very few of them are prompted to maintain large raw material stockpiles. Indian producers are also facing a similar situation with their PP inventories. If inventories continue to pile, production facilities would be forced to curtail their output levels.

A domestic industry source informed a Polymerupdate team member, “In India, Reliance Industries Limited announced the Domestic Sales Incentive Scheme in PP for May 2023 where X- Rs. 1.50/kg, Y- Rs. 2/kg and Z- Rs. 2.50/kg.

In India, Middle Eastern producers have offered their PP Homopolymer grades in the range of USD 940-980/mt CFR levels for shipment in June 2023. Bidding was heard at USD 900/mt levels also.

In Pakistan, PP raffia and PP injection grade prices were assessed at the USD 980-1030/mt levels, down USD (-30/mt) from last week. PP film and BOPP prices were assessed at the USD 1000-1060/mt CFR levels, both week on week decreased by USD (-30/mt). PP block copolymer prices were assessed at the USD 1010-1090/mt CFR levels, a fall of USD (-30/mt) from the previous week. Buyers in Pakistan are attempting to make bulk quantity purchases in anticipation that price levels will continue to decline. In recent times, the Letters of Credit (LC) situation has seen a significant improvement in the country as a large number of buyers in Pakistan have sufficient inventories and are not dependent on credit to fund the purchase of their import cargoes.

In Pakistan, a producer from the Middle East have offered their PP Homopolymer grades in the range of USD 980-1030/mt CFR levels for shipment in June 2023.

In Sri Lanka, PP raffia and PP injection grade prices were assessed at the USD 1020-1040/mt CFR levels, both down USD (-20/mt) from last week. PP film and BOPP prices were assessed at the USD 1030-1070/mt CFR levels, both week on week declined by USD (-20/mt). PP block copolymer prices were assessed at the USD 1050-1080/mt CFR levels, both decreased by USD (-20/mt) from last week.

In Sri Lanka, Middle Eastern producers have offered their PP Homopolymer grades in the range of USD 1020-1040/mt CFR levels for shipment in June 2023.

In Bangladesh, PP raffia and PP injection prices were assessed at the USD 950-990/mt CFR levels, down USD (-40/mt) from the previous week. PP film and BOPP prices were assessed at the USD 960-1010/mt CFR levels, both week on week lower by USD (-40/mt). PP block copolymer prices were assessed at the USD 970-1040/mt CFR levels, a sharp drop of USD (-40/mt) from the previous week. The Bangladesh market outlook continues to be gloomy with a persistent contraction in reserves which has prompted purchasers to get into an aggressive mode while undertaking negotiations. Sellers have seen a sharp fall in bids this month.

In Bangladesh, a Saudi Arabian producer has offered its PP Homopolymer grades at the USD 950/mt CFR levels for shipment in June 2023. A producer from the Middle East has offered its PP Homopolymer grades at the USD 990/mt CFR levels for shipment in June 2023.

Feedstock propylene prices on Tuesday were assessed at the USD 785-795/mt CFR China levels, a plunge of USD (-75/mt) from last week. FOB Korea propylene prices were assessed at the USD 785-795/mt levels, a week on week tumble of USD (-50/mt).

In plant news, PetroChina Liaoyang is likely to restart its polypropylene (PP) unit by early June 2023. The unit was shut for maintenance on March 27, 2023. Located at Liaoyang in China, the PP unit has a production capacity of 300,000 mt/year.

In other plant news, Shaoxing Sanyuan Petrochemical has shut its No.2 Polypropylene (PP) unit on May 24, 2023 for maintenance turnaround. Further details on the duration of shutdown could not be ascertained. Located at Shaoxing, Zhejiang in China, the No.2 PP unit has production capacity of 300,000 mt/year.