Overseas PP Prices Stayed High amid Supply Dearth
Highlights: Overseas PP supply was tight because of the extensive unit maintenance in the Middle East and the shutdown of some units affected by the weather in North America. Overseas suppliers reduced the number of quotations, and PP USD-denominated prices increased notably, so limited imports flowed into China.
Overseas PP prices rebounded in 2023, and prices also realized an M-O-M increment in February 2023. Mainstream prices of homo PP were $950-970/mt at the beginning of February, which remained stable and high. Mainstream prices of PP copolymer were $990-1,020/mt, up $30/mt from the end of January 2023, mainly affected by changes in overseas supply-demand fundamentals.
In January, PP USD-denominated prices mounted up under the support of the costs and the futures market, but deals were muted during the Spring Festival holiday. After the holiday, PP prices were still underpinned by the 8-day consecutive rises in futures prices. At the same time, the overall overseas supply tightened to support the price. In February, PP USD-denominated prices rose and then trended sideways. In H1 February, the prices stayed high on the back of firm futures prices and feedstock costs, while the prices dipped in H2 February amid lower costs and limited improvement in demand.
PP supply tightened with more unit maintenance in Northeast Asia and the Middle East
The operating rates of overseas PP units inched down in February. For instance, Lotte Chemical planned to take an overhaul from February to March; the commissioning of HMEL (HPCL-Mittal Energy Limited) in India was postponed; Reliance Industries took an overhaul from January to February; units’ maintenance was intensive at the Middle Eastern producers such as YanSab and Rabigh Refining and Petrochemical. Deficient supply in the Middle East led to sparse quotations. Generally, maintenance was scant in the U.S. and Europe, but that was relatively intensive in Northeast Asia, Southeast Asia and the Middle East, which resulted in a supply shortage.
Overseas PP Unit Maintenance (Partially)
At present, more overseas PP suppliers curtailed operating rates or stopped production given soft profits, besides projected maintenance. The overseas output loss caused by maintenance registered an M-O-M increase in February, which further shortened the overseas PP supply. The overseas trading atmosphere perked up accordingly. PP USD-denominated prices also gained ground on the back of supply shortage. Some units may still undergo maintenance in the future, so it will be hard to ease the supply tightness. That will also underpin PP prices for a certain time.
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