Morning Briefing - 26 September 2022
CommoPlast
Morning Briefing
26 September 2022
Brent: $86.15 (- $4.31）
WTI: $78.74 (- $4.75)
Naphtha CFR Japan: $672 (- $9)
Ethylene CFR NEA: $900 (- $40)
Ethylene CFR SEA: $910 (- $20)
Propylene FOB Korea: $875 (Stable)
Propylene CFR China: $895 (Stable)
*Data represent closing prices of the previous trading day
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Toward the last weekend, Vietnamese customers abruptly return to the market to make replenishment for homo-PP, though prices remained the biggest concern. In fact, most transactions observed were below the $1050/ton threshold, based on CIF term.
Southeast Asian market participants have been actively discussing the depreciation of the local currencies against the US dollar, which would make imports more expensive. In the meantime, the general expectations are that import offers might not fall below the $1000/ton threshold again, at least in the coming weeks, as most PP plants in Asia are operating at lower rates.
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In a span of seven trading days, the Asian ethylene market has fallen $90-100/ton on improving supply conditions from the influx of deep seas cargoes while buying interest from downstream was muted.
According to industry participants, buy ideas for ethylene among Northeast Asian buyers are well below the $900/ton threshold at the moment. Looking ahead, market sources do not see much support for the downstream sector in the final quarter of the year, hence, minimizing the risks of building stocks.
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In related industry news, the Indonesian government has expanded the Commodity Balance to cover key plastic resins under the heading 39 in the Harmony System. The implication is that Indonesian buyers and sellers will have to apply for permits to import and export the products that fall into this category. Moreover, a quota system will be applied (a Quantitative Restriction).
Many buyers have openly expressed their frustration over the heightened non-tariff trade barriers, which would deter small to medium-scale manufacturers from gaining the advantage of having access to a wider global supply of raw materials. However, the Ministry of Industrials expects domestic supply to fully meet demand by 2027 once key local petrochemical plants completed the expansion projects.
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