Weak local market pushes Indian PP makers to release cargoes in overseas destinations

To the surprise of Asian buyers, deals for Indian homo-PP cargoes plunged to below the $1000/ton threshold in China, reaching $980/ton CFR China with a condition that purchased quantity must be 1000 tons and above. This is the lowest level market has seen since mid-July 2017 and literally rocked the sentiment despite the recovering in the local ground.

“We find the new offers very attractive. Domestic market is recovering from weeks of sliding and we managed to re-sell some quantity at $1030/ton with the same term,” a Chinese trader said.

It is reported that demand for PP in India has been sluggish in recent weeks as buyers refrain from keeping high inventories amid softer end product demand and tighten cash flow. “Therefore, we are looking at exports market to deplete some cargoes,” an Indian producer added.

Vietnam market has not been left out in the time like this. In fact, deals for the same cargoes reached $1060/ton for January shipment, creating a widespread expectation that other suppliers would soon follow the move. It is important to note that buyers have to off-take 1000 tons at once in order to obtain this price at the moment.

Players here fear that prices might soon fall below the $1050/ton mark despite the fact that most Middle Eastern sellers have yet to agree to transactions below the $1100/ton threshold. “The deal for Indian cargoes is pave the way for market to move lower. We are waiting for now,” a source said.

Meanwhile, from the latest price levels, Asian buyers expect the room for further reduction is getting narrower, especially at the current propylene costs.

At the moment, import homo-PP to Vietnam stands at $1060-1170/ton CIF, LC AS term and to China at $980-1070/ton CFR, LC 0-60 days term.