News Code : 43780

Petrotahlil :Domestic PP prices in Thailand have slipped by almost 11% since the downtrend began in late October. The decreases have been mostly driven by the weakening interest of buyers to stock cargoes, resulting in an increase in supplies. As suppliers are now looking to clear inventories ahead of the year-end, prices have tumbled to their lowest since January 2016.

Local producers put in aggressive bids

“Two producers seem to be on an aggressive price sale. Some big buyers said those selling prices are quite attractive compared to total imported cost,” a local trader said.

Traders said that local producers needed to lower offers in order to move volumes out for January delivery. With only four weeks until the Chinese New Year, local suppliers were keen clear stocks before fresh import offers.

Thailand is home to the largest overseas Chinese community in the world. The Chinese New Year starts on January 25, which is observed as a public holiday in some provinces of the country.

Domestic prices gain a competitive edge

Local PPH raffia prices on FD Thailand basis have fallen around 11% from mid-October, according to ChemOrbis Price Wizard.

Import prices of similar material, meanwhile, lost 12% between mid-October and early December in Southeast Asia. However, the import market has edged up 2% recently. Adding the 3% customs duty, the cost of import cargoes will match or even go above the local market. This naturally puts the domestic market to an advantageous position for buyers.

Local producers pressured to destock

Pressure on sellers is expected to mount due to ample supplies, which are being stretched by weak demand and reduced buying. An agent noting that a domestic producer has lowered PP offers said “They don’t have stock on hand but they want to attract customers to buy from them”.

An end-product maker also said, “Demand is slow and supplies are comfortable. The market will be soft and we can see prices getting lower.”

Can shutdowns help mitigate downside?

There could, however, be some support for the domestic market. Some players believe that planned shutdowns in the region may buy the market some time to absorb the current supply.

Siam Cement Group (SCG) is due to shut a PP line for two-week maintenance in late January while HMC Polymers’ 300,000 tons/year PP line was shut for maintenance from December 14, according to market sources.

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Source :ChemOrbis

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