Focus article by Leanne Tan
SINGAPORE (ICIS)--Southeast (SE) Asia’s polypropylene (PP) import prices are seen to be stabilising, ending 12 consecutive weeks of decline, as inventory pressure among Middle East suppliers has eased, market players said on Friday.
Most market players expect spot PP prices to see limited fluctuations in June and July, while some producers were hoping for a price rebound in August or September, as regional demand typically improves in the run-up to the Christmas season.
Spot PP flat yarn average prices for cargoes of all origins have fallen by nearly 10% since early March, driven down by weak regional demand and a bearish Chinese market.
For most of April and May, converters in southeast Asia had delayed procuring cargoes as they expect prices to continue tracking declines in the Chinese domestic market, prompting sellers to continuously cut offers.
But this week, offers for dutiable flat yarn cargoes for June shipments from the Middle East firmed to $1,050-1,060/tonne CFR (cost and freight) SE (southeast) Asia.
Initial offers for June shipments from the Middle East emerged last week at $1,030-1,040/tonne CFR SE Asia for benchmark flat yarn grade cargoes.
“Producers have mostly sold out June lifting lots. If the bids are still coming in at very low levels, they don’t have any strong incentive to accept them. Most would rather just walk away," a producer based in southeast Asia said.
Producers in the Middle East, which is a major exporter of PP to southeast Asia, had been focused on clearing off June allocation volumes as quickly as possible, ahead of the Eid ul-Fitr holidays late this month, market players said.
Eid-ul-Fitr marks the end of the Muslim fasting month of Ramadan, which started on 27 May.
Suppliers with limited stocks on hand were targeting higher prices now that offers for dutiable Middle Eastern cargoes have dried up this week. Most producers in the Middle East have managed to clear off bulk of their June allocations.
Some converters in southeast Asia, however, were not convinced that prices will see any major rebound in the coming weeks.
“The price gap between spot prices in China and prices in southeast Asia is still wide, so prices in southeast Asia still have room to come down further,” a Malaysia-based buyer said.
Dutiable PP flat yarn were last assessed at $980-1,000/tonne CFR China, lower by around $50/tonne compared with prices in SE Asia, according to ICIS data.
“Also, demand for finished goods is likely to be dull in the weeks ahead, due to regional holidays in several ASEAN countries,” the buyer said.
The Ramadan and Eid-ul-Fitr are observed in the Middle East, as well as in some countries in southeast Asia, including Indonesia and Malaysia.