Vietnam PP Market Has Not Shown Signs Of Recovery Post Lockdown
- Demand has yet to improve
- Market sentiment started to turn positive
- Outlook remains pessimistic
SSESSMENTS.COM’s pricing database showed that Vietnam PP market is not showing signs of recovery despite market sentiment turning positive over the week. As crude oil prices have been rallying, a local producer applied a price increase of VND500,000/ton ($21/ton) on PP Homo Raffia offers as compared to the previous week, available at VND23,500,000/ton ($1,002/ton) on cash, FD Ho Chi Minh basis and including 10% VAT. Some buyers voiced out their buy idea for local cargoes between VND20,500,000-21,000,000/ton ($874-896/ton)-level considering the current market situation. For purchasing volume of 25 tons, some converters managed to purchase localized Saudi PP Homo Raffia cargoes at VND20,000,000/ton ($853/ton) with the same payment and delivery term, or at the initial offer level as it is considered competitive than most import and other local offers. However, some buyers are reluctant to make fresh purchases this week as most are still holding on to sufficient stocks after securing sufficient volume in the past couple of weeks.
From the import market, Vietnam PP market saw prices trending higher in line with the rebound in crude oil prices. For Southeast Asia origin cargoes, the leading Malaysian polyolefins producer has announced June shipment offers to the Vietnam market this week. As compared to May shipment, the producer instituted a price increase of between $10-30/ton on PP Homo Raffia and PP Homo Injection grades. As for Indian origin, the leading Indian petrochemical producer increased offers by $30/ton compared to the same period. For Middle East origin, a Saudi producer attempted to raise their PP Homo Raffia offers by $20/ton from a week ago.
Vietnam has begun lifting lockdown measures from late April after a steady decline in the number of new confirmed cases, adding that the country is preparing to resume economic activity after one month under a near-total coronavirus lockdown. Most companies are slowly resuming business operations under strict guidelines as the government started allowing businesses in low-risk areas to resume operations from April 25. Since the country is gradually lifting the stringent lockdown measures, market sentiment has turned more bullish over the week. However, domestic demand has yet to pick up as most buyers adopted a wait-and-see stance and are reluctant to purchase in bulk since the outbreak grounded the economy to a standstill. Further added, some downstream factories are still struggling to keep their operating rate at normal levels amid weak end-users demand for finished products. No significant supply issues were reported to SSESSMENTS.COM.
For the outlook, Vietnamese market players believe that there would be no room for further price increase in the near term as there are no strong demand fundamentals to support any form of price increase. Some expressed that PP prices will continue to face mounting pressure from sour downstream demand.
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