Morning Briefing - 28 March 2022
CommoPlast
Morning Briefing
28 March 2022
Brent: $120.65 (+ $1.62）
WTI: $113.9 (+ $1.56）
Naphtha CFR Japan: $966 (- $46.5)
Ethylene CFR NEA: $1370 (+ $20)
Ethylene CFR SEA: $1370 (+ $20)
Propylene FOB Korea: $1260 (Stable)
Propylene CFR China: $1200 (+ $10)
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The international crude oil benchmarks extended gains on Friday, 25 March 2022 after a storage facility belonging to Saudi Aramco in North Jeddah was hit by a barrage of drone attacks. Although the facility is focused on the domestic market, industry experts said the incident could cause some short-term operational disruptions and reduce Saudi supply.
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The ocean freight costs from China to Vietnam is set to increase about $500/40FT container in April, according to several export-oriented Chinese traders. Heavy port congestions due to COVID-19 containment measures and the surge in bookings are attributed to the latest hikes.
Chinese sellers are facing heightened challenges from weak local demand to narrowing export opportunity window (as a result of rising shipping costs and softer demand ahead of the Ramadan season). Although the local inventories at producers’ warehouses have fallen sharply late last week; traders have yet to see any relief in storage pressure due to the transportation bottleneck.
In other news, several Chinese PP and PE producers told CommoPlast they are planning to operate at reduced rates throughout April in anticipation of the persistently weak demand and squeezed margins.
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Following the new PVC price announcement from a key Taiwanese producer with $100/ton hikes to Southeast Asia, other regional and international suppliers are lifting offers in a similar range.
At the moment, at least a South Korean producer and a Thailand maker claimed to have sold out all available quantities to the Malaysian market in the range of $1470-1560/ton CIF terms. Meanwhile, Chinese carbide-based PVC cargoes are offered at $1430/ton with the same term, a $40-60/ton higher from the previous week. Malaysian buyers are not aggressive in making new purchases despite a strong expectation for continued price hikes in the near term, fearing lower end-product demand during the Ramadan months.
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