Import homo-PP to China and Vietnam firmed up on stronger upstream costs

Overseas suppliers started the new week by implementing up to $25/ton hike on import homo-PP cargoes to Vietnam and China with a strong support from firm upstream energy and propylene costs. However, there are no kneejerk reactions from the demand side, as buyers are not confident in making purchases at the current levels.

Crude oil futures have reached the highest levels since late 2014 on concern that the USA would withdraw from the nuclear deal with Iran, which lend some supports to the downstream naphtha prices. Besides, the Asian propylene market, which was facing downward pressure amid sluggish demand in China due to a number of PP plants shutdown that reduces demand for monomers, has now revived.  

Thailand homo-PP cargoes see $25/ton hike from last week to $1315/ton CIF Vietnam, LC AS term. Couple of sources are expecting deals to reach the $1300/ton level, however, no immediate transactions have been recorded. “Domestic market is unable to firm up. We prefer to take a cautious stance as Nghi Son Petrochemical might start offering commercial cargoes in June and ease the current tightness condition,” a buyer said.

Most Middle Eastern suppliers have not opened any new offers claiming lack quantity available. “We have contacted a number of suppliers today and received no offers. Prices are firming up, though we might only source small quantity for June to protect margin as it is traditional low demand season,” a woven bag manufacturer informed. 

In China, Saudi and Indian cargoes recorded $10-20/ton increased from last week to $1230-1240/ton CFR China, LC 0-60 days term and deals have been reached at $1220/ton level. Similar to Vietnam, purchasing activities are not strong here and overseas sellers are diverting cargoes to other markets where margins are higher. “We did not open any new offers to China this week as we managed to conclude some quantity to Vietnam at $1270/ton CIF term. Supply is tight in both local and import ground stemming from a series of plant shutdown. This situation is likely to persist in the coming weeks, which would support the sustainability of the firming trend,” an international trader said.