China’s PP market hits 3-year-low, but still lags propylene’s fall
China’s import PP market has recorded the largest weekly loss in more than 2 years, according to ChemOrbis Price Index. Import homo PP prices have decreased by $50/ton this week on average. The low end of the range even broke below a new threshold, which was last seen in late 2011.
Nevertheless, the losses in the upstream markets are much larger than that of PP. Spot propylene prices plunged by around $100/ton just in the past week in Asia. Average spot propylene prices on FOB South Korea basis already broke below the $1000/ton threshold, which was last seen in late 2009 as shown in the graph below.
With the larger fall in propylene prices versus PP, the gap between propylene and PP has widened recently, improving margins on the PP side as seen from the third graph below.
On top of the pressure from the upstream chain, the ongoing additions of new coal based capacities inside China are also exerting downward pressure on the PP market. “We hear that some traders are forward selling materials for the first quarter of 2015 at even lower prices. We are struggling to conclude deals even on a back to back basis now as most buyers are keeping to the sidelines in anticipation of seeing further price reductions over the near term,” a trader stated.