Southeast Asian players: The PP market might be nearing the bottom

The import homo-PP market in Southeast Asia has been following softening trend since earlier this month amid falling upstream costs and persistent weak buying interest in China that encourages a strong flow of re-export material to the region. However, international suppliers are taking firmer stance on their available cargoes, refusing any additional discount after nearly $100/ton reduction on offers in the span of a month, according to CommoPlast data.

In fact, the previous price falling was mainly driven by the heavy in-flow of re-export cargoes from China, players said, since actually direct supply, especially from Middle Eastern suppliers remain relatively tight. “And as the number of cargoes from China diminished, market is regaining stabilisation,” a regional trader commented.

Many buyers within Southeast Asia were initially holding the wait and see stance, hoping to see further price cut before making additional replenishment are now planning to come back to make purchases. A Vietnamese buyer said, “There are very limited number of new offers in the market these two weeks. Our suppliers are very firm on their cargoes, therefore we are planning to replenish gradually to avoid price risk.”

Another Indonesian buyer received Middle Eastern homo-PP offers at $1150/ton CIF Indonesia, LC AS term said, “We were hoping that dutiable cargoes would breach below the $1100/ton mark given softer than expected demand in both China and Turkey. However, it appears that suppliers are in no rush to make the adjustment due to the lack of inventory pressure. We decided to replenish some cargoes from local market to maintain the stock levels.”

Though Southeast Asian buyers are generally still very cautious about making fresh replenishment; the common expectation is that import homo-PP to the region is now having very limited room for any significant reduction. At the moment, homo-PP prices in the region stands at $1090-1190/ton CIF, LC AS term.