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Overseas suppliers continue to introduce fresh hike on import homo-PP to Vietnam this week, pushing offers for dutiable cargoes to above the $1300/ton threshold for the first time in more than two (2) years. Surging propylene costs and persistent limited supply are the main contributor to the trend.

Compared to beginning of January 2018, propylene costs based on FOB South Korea term surged more than $130/ton to $1080/ton on 30 January, thanks to healthy demand from Chinese buyers, who are looking for spot cargoes to build inventories ahead of the long holidays.

Rapid upswing in upstream market provided PP suppliers additional support apart from the tight supply condition stemming from a series of plant issues in recent months. However, Vietnamese buyers are not very receptive towards the latest hike and a number of large-scale converters have restocked sufficient stock until April. “It is becoming more difficult to accept the current market levels. We think prices are nearing the peak and some discounts must be made available on deals,” a converter said.

To support that notion, industry sources in the upstream propylene market are reporting of slower buying interest in China, which depict a more stabilizing stage ahead. “We are also concern that energy complex is weaker, affecting the sentiment to a certain extent,” another buyer added.

Several other converters are speculating that deals for dutiable cargoes might remain stable at $1270-1280/ton CIF Vietnam, LC AS term while complaining about a drop in end product order ahead of the long Lunar New Year holiday.