Polypropylene Remains Bearish In South-East Asia
Polypropylene Remains Bearish In South-East Asia

Polypropylene Remains Bearish In South-East Asia

  • 11-Aug-2022 5:00 PM
  • Journalist: Motoki Sasaki

New Delhi: In the first week of August 2022, the Polypropylene market in Asia and Europe observed persistent bearish sentiments in the regional markets. The producers were constantly pressured to reduce the offered quotations for Polypropylenes. The pessimist sentiments hovered amongst the players, and MRPL declined their offers by INR 7000 per tonne for PP and RIL rolled over the prices for Polypropylene after reducing the quote last month for the September deliveries. The spot transactions for Polypropylene were below average, and price competitiveness is high amongst the players in the Southeast Asian markets.

The bearish sentiment in the Southeast Asian markets has been impacting since the first quarter's last month. On average, the values of Polypropylene amongst the prominent market in the ASEAN group plummeted by 20%-23% since March. A major market source stated that the restocking of the inventories has been running on high levels since May, with a presumption that the Chinese player's return post lockdown will put a significant constraint on the supplies, and prices will shoot upwards in the meantime.

Currently, the inventory levels are still high, and the costs of PP further dropped, prompting a wait-and-see sentiment amongst the market players. The market participants were sturdy from the standpoint of not inquiring about new purchases until and unless hefty discounts were offered from producers. Furthermore, the consistent appreciation of the US dollar further weakens the PP dynamics in Southeast Asia. The imports were uncompetitive against rising inflationary pressure and weak demand in the region.

Whereas the overall sentiments for Polypropylene in the Eurozone were silent, the market activities remained quiet throughout July as buyers aimed to keep the inventories low. Several experts anticipate the current sentiments will likely prevail throughout August due to the summer holidays and ongoing stagflation in the European markets. The premiums in July fell substantially for the polyolefins amidst the market condition in China. 

The Polypropylene market in China has weakened due to the COVID induces lockdowns in major business cities, followed by export disruptions due to port closures. The report released by China's National Bureau of Statistics (NBS) recently showcased that the overall PMI of China in July observed a significant contraction to 49.0 from 50.2 in June after bouncing back from the COVID shutdown. Whereas the constantly increasing domestic capabilities of PP in the past few years have increased the supply capabilities in China, followed by the drawdown of the real estate and infra sector has crippled the demand throughout the Asia Pacific region for Polypropylene.

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