NE Asia C3 market continues bearish run, sentiments mixed

Source: ICIS News


SINGAPORE (ICIS)--Spot propylene prices in the import markets of northeast Asia are unlikely to change tack in April and may continue a downtrend.

Propylene prices have lost some 3.7% on average since 2 March when the prices were at $1,080/tonne CFR (cost & freight) NE Asia.

The latest decline in the final assessment week of March marked three consecutive weeks of loss and it highlighted the bearish nature of the post-Lunar New Year market.

The average spot price was $1,040/tonne CFR (cost and freight) NE (northeast) Asia in the week ending 30 March, down $10/tonne on average week on week according to ICIS data.

Chinese buyers were unsurprisingly in a jittery mood, some opting to stay out of the import market altogether as they have no idea when the downtrend could end.

“I am not interested in import cargoes,” said one buyer. With domestic prices still some way cheaper than import cargoes, there were many buyers echoing the same sentiments.

Some buyers took a different view, pointing to a stable to slightly firm price movement in the Chinese domestic markets in the week ended 30 March as a potential inflection point.

The average price in the Shandong market was yuan (CNY) 7,475/tonne ex-tank, up CNY150/tonne compared with average price on 23 March.

As such, some buyers took the plunge as they think that prices could be bottoming out.

From northeast Asian producers’ point of view, supply is tight and it is a matter of time before prices start to rebound again.

They are confident of a rebound as there is some planned maintenance work happening in the region.

Some traders said producers could be holding their spot offers or focusing on their respective domestic markets as they try to ride out the current slump in the Chinese import market.

A slump they hope is ending in April.

“It depends on polypropylene (PP) in the domestic China market. Once it is back up, everything else will follow,” said a seller, an opinion shared by many.

The first week of April could still see subdued trades as Chinese and Taiwanese market participants are gearing up for a short assessment week due to a holiday. Tomb Sweeping day holiday is on 5-6 April in China.

Japanese buyers are not expected to make any big moves in the week as well.

With discussions moving slowly to May arrivals, it is unlikely sellers are willing to lower their offer prices unless they are stuck with end-April arrivals.

Should the Chinese domestic markets continue to be bearish, the month of April could be a repeat of March, which means slow trades at the start of the month followed by a flurry of trades toward the end with prices on a controlled descent.

Top image: Polypropylene bottle; Photo by PhotoAlto/REX/Shutterstock

Focus article by Joson Ng