Vietnam PP Market Flashing Signs Of Further Price Rally
- Local offers hovering near the threshold level
- Leading Malaysian polyolefins producer adjusted July shipment offers further
- Allocation from Thai PP producer remains limited
SESSMENTS.COM’s pricing database showed that Vietnam’s PP market is flashing signs of the further price rally. Vietnam’s domestic PP prices have spiralled relentlessly upward over the last two months in line with the upward trend in the energy market. Since early June, most local PP Homo Raffia offers have bounced back to above VND25,000,000/ton-level, hovering close to the threshold level. This week, a trader expressed their sell idea for local PP Homo Raffia cargoes at VND26,500,000/ton ($1,135/ton) on cash, FD Haiphong basis and including 10% VAT. Some traders are attempting to raise their local offers by VND400,000/ton ($17/ton) from last week’s level. In contrast, another trader maintained a stable offer level for local and localized South Korean PP Homo Raffia cargoes from a week earlier as the company marked up prices higher than other local traders last week. Some buyers also received PP Homo Raffia offers from a local producer at VND26,000,000/ton ($1,114/ton) with the same payment and delivery terms, or VND1,500,000/ton ($64/ton) higher than the offer level available two weeks ago.
In the import market, the leading Malaysian polyolefins producer has adjusted up its July shipment offers further following the uptrend in the market. As compared to the offer level available on June 8, the producer initiated a price increase of $20/ton for PP Homo Raffia cargoes, available at $940/ton. Contrastingly, August shipment offers for PP Homo Raffia from the leading Indian petrochemical producer remain stable from last week at $920/ton. For Middle Eastern cargoes, a supplier opted to increase their offers for Saudi PP Homo Raffia and PP Homo Injection cargoes between $20-30/ton from a week earlier, available at $920-930/ton, respectively. In response, most converters voiced out their buy idea at $30/ton lower than the initial offer level, as the offers deemed too high. This week, most traders found difficulties in selling the materials as customers are still expecting PP prices below $900/ton-level, particularly for Indian cargoes. All import offers are on LC at sight, CIF Vietnam Main Port basis.
On Monday, June 8, Vietnam’s National Assembly ratified the EU Vietnam Free Trade Agreement (EVFTA) in a move to boost the country’s manufacturing sector and exports as it recovers from a Coronavirus route. Following the approval, the deal is expected to take effect as early as August 2020. The global spread of the highly contagious virus has continued to cause a huge drop in demand for end-products in the export destination as most countries are still fighting their respective battles against the pandemic with differing levels of intensity and still faced a high risk of further outbreaks. In the domestic market, some converters have started securing sufficient volume in anticipation of further price increase in the near term, while others are taking a halt on procurement activities as prices have been moving higher continuously. Most buyers have shown a stiff resistance to higher offer levels as it increased at a quick pace. Since the country gradually reopens after a quarantine that hammered its economy, some manufacturers took action to get the production back on track, even some already running at full capacity. On the supply front, SSSSMENTS.COM was informed that a Thai PP producer is in short of allocation for the Vietnam market.
Looking ahead, the majority of Vietnamese market players voiced out to SSESSMENTS.COM that local and import prices would remain stable to firmer in the days to come, considering current market conditions. However, domestic demand is projected to decline further as the country gradually enters seasonal slowdown.
