[Plastic] Asia polypropylene prices have reached a 13-18 month high

On November 25, due to optimistic fundamentals, few international trade quotations and limited supply of containers, polypropylene prices across Asia hit a new high in 13 to 18 months.

On November 25, the price of brushed PP CFR Far East Asia increased by US$70/ton to US$1,125/ton, the highest level since May 14, 2019, when the price was US$1,150/ton.

Similarly, the price of drawing-grade PP CFR Southeast Asia rose by US$55/ton to US$1115/ton, setting a new 18-month high since May 2019.

Traders generally believe that the fundamentals of the Asian PP market are strong, the supply is relatively tight, and the quotations are limited.

Strong fundamentals

According to sources, in China, on November 25, the total inventory of PP and PE of China's two major manufacturers was 565,000 tons, a decrease of 30,000 tons from last week.

Although China's demand for drawing grade PP has slowed down, the demand for injection grade and BOPP grades is still relatively healthy.

In the week starting from November 23, it is said that even non-standard injection-grade PP trading prices were higher than US$1100/ton CFR China.

In Southeast Asia, supply is generally tight, especially in Thailand and Indonesia, while the supply situation in Vietnam is better, and most factories are operating normally.

In addition, limited quotations from overseas and shortages of domestic supply in India have led to an increase in PP prices in South Asia.

Indian demand usually gradually weakens after Diwali in November, but it is currently almost stable.

Similarly, in Pakistan, buyers compete for volume in the absence of sufficient offers, leading to price increases.

Despite the strong fundamentals, the rapid increase in PP prices last week surprised traders by surprise.

"I am a little worried that the'price bubble' may burst," a trader said.

At the same time, some traders are optimistic about the new projects that China will start at the end of 2020 and early 2021, and added that once new supplies enter the market, prices may be lowered soon.

Limited container availability

According to sources, delays in shipments have forced some processors and traders to turn to local suppliers for purchases, pushing up local prices in Asia.

The limited quotations from the Middle East may be related to the logistics challenges and the availability of containers and the orders booked earlier, while the factory operations in the region remain basically normal.

The rise in freight rates due to the reduced supply of containers has exacerbated supply concerns across Asia.

Some industry insiders believe that tight container supply and high freight rates will continue until February.

(Keyword: Asia Polypropylene)