▶️Chinese domestic PP rises amid strong stock market.
▶️Wide price range, divided view in Southeast Asia.
Petrotahlil - Asian polypropylene continued to stay strong this week amid limited offers and firm upstream prices.
The PP raffia CFR Northeast Asia marker rose $5/mt on the week to be assessed at $905/mt on July 8.
Chinese trade participants generally remained cautious on imported PP cargoes, which were more expensive then China domestic prompt PP cargoes.
In addition, a few new Chinese PP plants are expected to be brought online in the third quarter, which also suppressed the buying interest from Chinese customers for August-onward-arrival imports.
Meanwhile, Chinese domestic prompt PP cargoes soared to as high Yuan 7,800-7,900/mt ex-works on the back of bullish sentiment in the wider financial market.
Chinese PP prices were pushed up by the strong Chinese stock market, not related to PP fundamentals, two sources said.
In Vietnam, the physical spot deals for PP raffia grade were heard concluded at a wide range of $925-$950/mt CFR Vietnam for Middle East- and Indian-origin dutiable cargoes, or $950-$990/mt CFR Vietnam for non-dutiable South Korea-origin cargoes, according to sources.
Market views were divided, with two traders saying that only a few Vietnamese customers were able to accept higher PP prices, while many other buyers continued adopting a wait-and-see approach.
Nevertheless, Middle East producers continued standing firm on offers with limited sales pressure.
“I don’t hear much about offer this week and the buyers are also not rushing to purchasing. The end-users have certain volume of inventory,” a Southeast Asian source said.
Most Vietnamese producers ramped up their operating rate, running at above 90% since July, the source added.
Southeast Asian buyers felt that the PP prices were almost at their peak, so their buying interest slowed down compared with the prior month, a producer said.
In India, PP demand continued to improve for raffia, IPP film and co-polymer grades, sources said.
An Indian source said that a Middle East producer was offering co-polymer grade as high as $1,000/mt CFR India due to tight supply, as the producers had to cut almost 30% co-polymers production due to ethylene shortage.
In upstream, ICE Brent crude oil September contract rose 77 cents/b on the week to $43.050/b at 4:30 pm Singapore time (0830 GMT) on July 8, while Asian naphtha was assessed $9.5/mt higher at $398.5/mt CFR Japan over the same period, based on Platts data.
Regional demand for propane has seen support in China in recent weeks from higher utilization by the country’s propane dehydrogenation, or PDH plants, market participants said this week.
“Run rates in China during June were at above 90% capacity,”
according to a Chinese LPG buyer. A Chinese PDH operator concurred.
“PDH plants are running close to full capacity in China at the moment,” the source said.
Platts Asian PP Weekly Rationale
The PP Raffia CFR FE Asia marker was assessed stable on the day, or up $5/mt on the week, at $905/mt on July 8, reflecting deals and tradable discussions heard at $890-$910/mt.
The PP Injection CFR FE Asia marker was assessed up $5/mt on the week at $905/mt, following the PP raffia marker.
China domestic prompt PP was assessed down Yuan 75/mt on the day, or Yuan 125/mt higher on the week, at Yuan 7,825/mt ex-works over the same period, reflecting tradable discussions heard at Yuan 7,800-7,850/mt.
Isotactic PP was assessed up $5/mt at $910/mt CFR FE Asia over the same period, considering a typical price differential of $10-$20/mt to the base raffia grade.
Biaxially-oriented PP was assessed up $5/mt on the week at $920/mt CFR FE Asia, following the adjacent marker.