Domestic PP prices in the Philippines may rise after Holy Week

Focus story by Angeline Soh

SINGAPORE (ICIS)–The Philippines’ polypropylene (PP) market is subdued amid the ongoing Holy Week festivities in the country but prices may rise after it ends as domestic demand returns to normal, market participants said on Tuesday.

Demand remains traditionally weak in the lead up to and during the Holy Week, which will run from 13-19 April in the Philippines, they said.

Buyers of PP in the market typically keep their inventory levels lean during this period, but enough to meet near-term requirements and will not need to stock up, according to traders and buyers.

Currently, PP discussions in the Philippines market were scant as many market players were away for the holidays. PP injection and flat yarn prices have been stable for the past fortnight at Philippine pesos (Ps) 40.00-41.00/lb ($0.90-0.92/lb) DEL (delivered) Manila, according to ICIS data.

Prices of PP in the domestic markets could rise following the festivities as demand levels for the material begins to rise and normalise, they said.

The tight supply of PP in the domestic market could further bolster prices, according to domestic market participants.

“The buyers haven’t received offers for local cargoes since February,” said a trader.

“In the meantime, we have to match the import offers,” the trader added.

Philippine Polypropylene Inc (PPI) has been running its 160,000 tonne/year plant at Limay, Bataan in the Philippines, intermittently since early January this year because of a shortage of on-site propylene feedstock, according to ICIS data.

Several market traders and buyers said that the return of JG Summit’s PP plant in mid-April could neutralise the possible price hike caused by the tight supply.

The 190,000 tonne/year unit plant in Batangas was taken off-line for upgrading works in March 2013.

“JG Summit’s return will have a market impact on the regional (southeast Asian) market, and not just in the Philippines,” said a southeast Asian producer based in the Philippines.

Across other southeast Asian countries, PP domestic and import prices are largely assessed as stable as the slew of public holidays within the region disrupted the momentum of market discussions.

According to ICIS data, PP injection and flat yarn prices have been stable at $1,500-1,570/tonne CFR SE Asia for the past two weeks.

($1 = Ps44.5)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections