Morning Briefing - 30 May 2022
CommoPlast
Morning Briefing
30 May 2022
Brent: $119.43 (+ $2.03）
WTI: $115.07 (+ $0.98）
Naphtha CFR Japan: $882 (+ $15)
Ethylene CFR NEA: $1050 (- $20)
Ethylene CFR SEA: $1150 (+ $30)
Propylene FOB Korea: $1030 (- $15)
Propylene CFR China: $1010 (- $15)
*data represent closing prices of the previous trading day
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After breaching below the $1200/ton threshold, the Vietnamese homo-PP market started to show signs of a rebound. On the final trading day of the week to 27 May 2022, several buyers rushed back to the market to procure South Korean and Indian parcels at $1220/ton – a level that was widely rejected just a day before.
While most buyers have managed to replenish some parcels prior to the increases, the purchased quantities this round are much smaller than the previous cyclical bottom. Two factors are attributed to this issue: firstly, suppliers limit the selling quantity due to loss-making, secondly, buyers refrain from keeping lengthy stocks amid the uncertain end-product demand outlook.
All eyes are on the sustainability of the rebound trend. One of the biggest questions Vietnamese buyers asked was: Would China’s economic stimulus package be able to elevate the regional petchem market when inflation is curbing demand in the West?
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The price rout in the Chinese PVC market deepened last week as the dwindling futures contract eroded buyer confidence. Spot offers for carbide-based PVC fell CNY 250-350/ton ($37-52/ton) while ethylene-based PVC plunged CNY 350-400/ton ($52-59/ton). Both grades are now at the lowest level since mid-January 2022.
With Shanghai reopening this 1 June and Beijing starting to ease COVID-19 restrictions, market players expect the government to escalate spending on infrastructure to revitalise the economy. Some traders have temporarily suspended all export offerings with hope that the local market would improve in the coming week, lending some support to the regional market outlook.
Export offers for carbide-based PVC stood at $1100-1140/ton FOB China, and at $1150-1170/ton for ethylene-based PVC.
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