SE Asia PP block copolymer prices fall below that of homopolymer flat yarn

Author: Leanne Tan

2019/11/08

SINGAPORE (ICIS)--Copolymer block polypropylene (PP) dutiable spot prices in southeast (SE) Asia have fallen below that of homopolymer flat yarn for the first time in over six years, with spreads likely to remain negative in the near term.

The automotive sector is a major downstream sector for block copolymer PP. (FILIP SINGER/EPA-EFE/Shutterstock)

Increased competition from duty-exempt South Korea origin block copolymer cargoes offered at highly economical prices has put a massive dent on demand for dutiable Middle East origin cargoes.

Even block copolymer material produced by regional producers, who also enjoy duty-free status within SE Asia, has also lost some of its appeal.

In comparison, supply of PP flat yarn grade have not been as long.

Some supply tightness for flat yarn as a result of ongoing plant outages in SE Asia have slowed the decline of flat yarn spot prices over recent weeks.

However, the suppliers currently undergoing maintenance turnarounds mainly focus on the production of homopolymer grades, and are not major producers of copolymer resins.

Hence, supply of copolymer resins have not been affected, and remains ample in contrast.

Dutiable PP block copolymer were last assessed at $1,000-1,010/tonne CFR (cost and freight) SE Asia on 1 November, ICIS data showed, reflecting deals transacted for Middle East origin cargoes at those levels.

In contrast, dutiable PP flat yarn grade prices remains pegged at around $1,010-1,030/tonne CFR SE Asia as of 1 November, translating to an average price difference between the two grades of around $15/tonne.

The last time block copolymer registered lower prices than that of flat yarn was over a six years ago in January 2013.

Market players say sentiment for block copolymer is unlikely to see any major improvements in the near term.

A persistently weak automotive industry - a major downstream sector for block copolymer - in China and many SE Asian countries, will likely continue to weigh on demand for the grade.

Focus article by Leanne Tan