Demand seasonally weak in lead-up to Ramadan
Asian polypropylene prices fell this week amid lackluster demand. Market sources were expecting fresh supplies to emerge from the new RAPID plant in the third quarter, while the seasonal low demand period during Ramadan in May was likely to keep requirements suppressed. Globally, sources were taking market cues from Asia’s demand, as the region accounts for 60% of global demand, sources said. Despite the current lull, average demand growth for PP at 7%-8% was anticipated to rise in line with GDP growth forecasts across most of Asia, and be slightly higher in China and India. Market analysts said PP continued to take direction from crude oil prices, with its predominant feedstock being naphtha at 43%. With a wide average margin of more than $150/mt using naphtha as feedstock and $300/ mt for PDH-based PP, integrated margins are unlikely to turn negative in the second half of the year, sellers said. Some of the excess homopolymer supply in Asia is expected to flow into South America, where there was a deficit of around 300,000-400,000 mt/year, according to S&P Global Analytics. Many producers also plan to sell more material in Bangladesh, Pakistan and India in coming months, where import demand is estimated at a collective 1.4 million mt/year in 2019, up around 10% year on year, according to seller estimates. No new capacity was seen coming online in the Middle East, a key supply region, which exports around 4 million mt/year of PP, according to S&P Global Analytics.
Asian raffia grade polypropylene was assessed down $10/mt from last Friday at $1,120/mt CFR Far East Asia Friday, above buying ideas at $1,100/mt CFR FE Asia. Injection grade PP was assessed at $1,120/mt CFR Far East Asia, down $10/mt from last Friday, as market participants said there was no difference between the raffia and injection grades. IPP was assessed at $1,140/mt CFR FE Asia, down $10/mt, based on a spread of $20-$30/mt to raffia. Biaxially-oriented PP was assessed down $10/mt on the week at $1,130/mt CFR Far East Asia, reflecting the typical spread between raffia and BOPP at $10- $20/mt. Block copolymer was assessed down $10/mt on the week at $1,170/mt CFR Far East Asia, reflecting the typical spread of $40-$50/ mt to raffia.