The leading Indian petrochemical producer contacted by SSESSMENTS.COM disclosed previous deal levels for export PP cargoes along with factors that may determine the upcoming pricing decision. As reported, the producer has yet to release fresh PP offers to the export market; the offers will likely to come out by the end of this week. In the prior week, the producer managed to close deals for PP Homo Raffia cargoes with all of their customers within the Asia market. To China, the last deal levels were closed at $915/ton, or $5/ton higher. To the Southeast Asia market, the producer managed to close deals with Vietnam and Indonesian buyers, both at $935/ton, or between $5-10/ton higher. Whereas to the South Asia market, the deals were concluded at a similar level. All compared to deals concluded a fortnight ago.
The producer added to SSESSMENTS.COM that next week, the market would be muted due to Eid Al-Adha holidays, particularly Bangladesh market. Instead, this week, the producer has received some inquiries from Bangladeshi buyers asking for PP Homo Injection cargoes since the Bangladesh market is not using PP Homo Raffia that much. To enlighten, the producer said that the Bangladesh market is mostly using IPP Film and PP Homo Injection; but for IPP Film the producer has not received any inquiries as garment industries in the country are still struggling amid low demand from the export market. Further added, despite a flood that hit Bangladesh, most manufacturing activities are still going smoothly, citing that the flood only hit the rural areas, while the industrial areas remain safe.
This week, SSESSMENTS.COM was told that the overall market is rather quiet as most buyers are contemplating whether current price levels are worth buying or not while some prefer to stay on the sidelines to wait for the upcoming offers. Speaking of pricing outlook, the producer mentioned some factors that could determine the upcoming export PP offers. First, firm propylene prices, especially after the recent fire accident at Formosa’s RDS unit. Second, strong crude oil prices. Third, supply chain issues experienced by the Middle Eastern producers stemming from lack of manpower; resulting in a lower turnaround of the containers at the exporting ports, hence, the quantity is expected to remain limited. Fourth, shutdown at several PP plants in Southeast Asia and China. Considering those factors, the producer believes that it is rather hard for PP prices to be adjusted down in the near term. However, the producer is also not sure that the prices could go further up either since the chance is blocked by the not-too-promising demand. As such, the producer foresees PP prices would remain firm and maintain stable at the current levels.
In the India domestic market, PP demand is lukewarm, SSESSMENTS.COM was told. Traditionally, December is counted as the good season for PP because of the year-end festivals. But this year, the pattern probably will not be repeated, the producer commented. Therefore, in the third and fourth quarter of 2020, the producer did not expect to see strong demand for PP as it is most likely will remain stagnant at the current state.
