SINGAPORE (ICIS)–Polypropylene (PP) import prices in southeast (SE) Asia stood at an 18-month high and may remain bullish owing to tight availability of spot supply, market players said on Monday.
Spot prices of dutiable cargoes of PP flat yarn broke the $1,100/tonne mark on 10 February, closing at an average of $1,105/tonne CFR (cost and freight) SE Asia in the week, levels last seen in late July 2015, ICIS data showed.
Prices for cargoes of different origins have been steadily rising since early December last year, with the cumulative gains pegged at 7%.
The PP market is getting a further boost from firmer costs of feedstock propylene.
“There are very few [PP] offers trickling in from the Middle East this week. Some of the producers are still in the midst of unscheduled turnarounds, and spot supply will likely to continue to be tight for the coming weeks,” a southeast Asia-based trader said.
Buying activity picked up at the start of the week, as some converters in Vietnam returned to the import market after the Lunar New Year holidays, keen to procure some volumes for May arrivals amid concerns that spot prices would escalate further in the near term.
“Some Vietnamese converters and buyers like to make a procurement and secure at least one sales contract after the Lunar New Year holidays, as it is believed to be an auspicious way to usher in the new year,” a trader based in Vietnam said.
The Lunar New Year, which was on 28 January this year, is celebrated in most parts of southeast Asia and northeast Asia.
Import PP prices in Indonesia were similarly firm owing to a shortage of the material in the domestic market, as a major local facility has remained shut for a scheduled maintenance.
Between dutiable and non-dutiable-origin cargoes, the gap in offers has narrowed as supply of non-dutiable cargoes has remained relatively ample in contrast to that of dutiable PP cargoes. Their typical price gap is usually around $80-100/tonne, according to market players.
Offers to SE Asia from the Middle East spiked owing to limited availability of dutiable spot cargoes.Spot offers for dutiable PP flat yarn cargoes were quoted at as high as $1,140-1,160/tonne CFR SE Asia last week, but actual deals were few. Some suppliers were reluctant to reduce offers amid a lack of inventory pressures.
In contrast, offers for non-dutiable PP flat yarn cargoes from ASEAN producers were mostly at around $1,190-1,200/tonne CFR SE Asia.
Despite the prices of dutiable materials catching up with that of ASEAN materials, market players said re-exporters in some southeast Asian countries, including Indonesia and Vietnam, still opted to procure cargoes from the Middle East.
Re-exporters in these countries are understood to be exempted from import duties, and hence, have a preference for lower-priced cargoes from the Middle East.
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