Morning Briefing - 20 December 2024

CommoPlast

Morning Briefing

20 December 2024

Brent: $72.88 (- $0.51)

WTI: $69.91 (- $0.67)

Naphtha CFR Japan: - $1

Ethylene CFR NEA: Stable

Ethylene CFR SEA: Stable

Propylene FOB Korea: Stable

Propylene CFR China: - $5

*Data represent closing prices of the previous trading day 

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Sentiment in China's local homo-PP market has softened amid reports of three new startups scheduled for December and early January. These facilities, operated by Sinopec Ineos (Tianjin), Shandong Jincheng Petrochemical, and Lihua Yiweiyuan Chemical, will collectively add an annual capacity of 850,000 tons to the market.

The anticipated influx exacerbates supply concerns already heightened by the earlier launches of Shandong Yulong and Inner Mongolia Baofeng III in the same quarter. These two facilities, with a combined output of 900,000 tons/year, have fueled speculation about imminent on-spec production, further dampening buyers’ procurement activity.

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Despite an initial decision to keep its weekly PP and PE offers stable, a leading Indonesian producer has revised its PP and PE price list mid-week, pushing spot offers up by IDR 570,000 — 710,000/ton ($35 — 44/ton). The decision was made under mounting exchange rate pressure, with the Indonesian Rupiah having plummeted nearly 3% since the start of the month. 

While the decision has not evoked panic buying, market participants expect that the pricing decision could potentially drive PP and PE buyers back into the market sooner than expected—especially as distribution suppliers mull over mimicking the firmer trend. However, any potential rebound in trading activity could potentially be tempered by higher buyer inventories and slow operation rates at converter plants.

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