Morning Briefing - 29 March 2022
CommoPlast
Morning Briefing
29 March 2022
Brent: $112.48 (- $8.17）
WTI: $105.96 (- $7.94）
Naphtha CFR Japan: $973.5 (+ $7.5)
Ethylene CFR NEA: $1370 (Stable)
Ethylene CFR SEA: $1400 (+ $30)
Propylene FOB Korea: $1260 (Stable)
Propylene CFR China: $1195 (- $5)
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Trading sentiment in the local China market, outside of Shanghai, seems to have improved on the first trading day of the week. Sources said that BOPP converters are returning to make replenishment after weeks of hibernating, which is a positive signal.
Meanwhile, the lockdown in Pudong and Puxi areas in Shanghai has created a bottleneck on delivery, further pressuring traders here. Not only trucking is restricted, but several bonded warehouses have also suspended operations, locking up the cargoes. The condition could persist until early April.
In the export ground, Chinese sellers are more active in markets outside of Vietnam because of better shipping costs. There have been reports that the increases in ocean freight rates to Indonesia are just half or one-third of the hikes to Vietnam, while to Pakistan, the rates have fallen to around $4200/40FT containers.
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According to Southeast Asian buyers, sales pressure seems to build up among South Korean PP suppliers. A South Korean producer opens yarn offers at $1420/ton CIF Indonesia, while actively inviting customers to place bids. Sources said that competitive Chinese cargoes have been pulling buyers away from other origins for too long, and lowering the prices to match the competition is the only way to close deals (especially when custom duties for both Chinese and South Korean homo-PP are the same in Indonesia)
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In related plant status news, India’s GAIL and OPaL are planning to shut their plants this April, but the production disruptions are not expected to create any major impact as market participants are well prepared for the supply losses.
In Vietnam, Nghi Son Refinery and Petrochemical unexpectedly shut its sole PP unit over the weekend due to an unexpected technical issue. The producer has been repeatedly facing issues since the beginning of the year. Vietnamese sellers are hoping to retain a firm stance on the local PP market, which has been facing downward pressure from the persistently weak demand and the heavy influx of low-cost cargoes over the past week.
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