Morning Briefing - 6 June 2022
CommoPlast
Morning Briefing
06 June 2022
Brent: $119.72 (+ $2.11）
WTI: $118.87 (+ $2.00)
Naphtha CFR Japan: $855 (+ $38)
Ethylene CFR NEA: $1050 (Stable)
Ethylene CFR SEA: $1150 (Stable)
Propylene FOB Korea: $1030 (Stable)
Propylene CFR China: $1025 (Stable)
*Data represent closing prices of the previous trading day
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Although it has become clear that the import homo-PP market in Southeast Asia has reached the cyclical bottom, regional and international suppliers continue to face immense challenges in implementing any real increases in the week to 3 June 2022.
Manufacturers are reluctant to chase after higher price parcels claiming the weak end-product demand, which raises the question of the sustainability of the current uptrend.
The Asian Development Bank (ADB) forecasts the inflation rate in Southeast Asia to reach 3.7% in 2022 before dipping to 3.1% in 2023. Though price pressure in Southeast Asia is less broad-based than in advanced economies, tighter liquidity is expected to affect purchasing power in the coming months.
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OPEC+ agreed on Thursday, 2 June 2022 to increase the production outputs by 648,000 barrels per day in the month of July and August – effectively ending the two-year agreement to a record output cut.
News on the output hike had limited impact on the market because most OPEC members have already operated at capacity, except for Saudi Arabia and UAE which still have spare capacity to ramp up further.
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In Indonesia, a major local producer surprising announced a new price list on Saturday, 4 June 2022, marking a change in the new price announcement schedule. The latest price list saw about a $20/ton increase on most homo-PP cargoes, once again highlighting the rebound trend in the PP sector.
“But the producer’s PE offers are still way above import and the distribution market. Prices must come down further. Demand for packaging materials remains sluggish even though Indonesia has entered the endemic phase,” a market source added.
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