Middle Eastern producers have been approaching global PP markets including China, Southeast Asia, Turkey and Egypt with lower prices for June recently while they refer to lower propylene and naphtha costs across the globe, restricted overall demand and confortable supplies as the reasons behind their pricing policy.
In China, this past week, more Middle Eastern producers showed up with their new prices. A Middle Eastern producer had initially revealed their June prices to China with $10-20/ton decreases with respect to their most recent May offers although later on they conceded to lower their prices by another $50-60/ton in order to conclude deals. Meanwhile, another Middle Eastern producer issued a $110/ton decrease on their import PP prices while concluding a done deal $10/ton below their initial price. A global producer had already come with $20/ton lower June prices for their Middle Eastern cargoes earlier and this week they expressed their new sell ideas with further decreases of $20-30/ton when compared with their initial June price levels.
Apart from lower production costs, lethargic demand from Chinese buyers also stands as an important pressure point in the country, causing distributors in China to re-export their Middle Eastern and Indian cargoes at their warehouses to Southeast Asia. More traders are reporting that they are looking to re-export their existing materials to Southeast Asia these days amidst poor demand in China.
Indeed, Southeast Asia’s import PP market is also seeing lower June prices from the Middle East as the market has been tracking a downward trend for some time in accordance with declining prices in the nearby Chinese market. A Middle Eastern producer announced additional decreases of $20-30/ton after conceding to some price reductions on their initial June prices last week.
Looking at Mediterranean markets including Egypt and Turkey, where Middle Eastern origins are considered to be the main supply sources, PP prices are being announced well below the May levels in line with the earlier expectations. In Egypt, a major Middle Eastern producer cut their June PP prices by $80/ton while another regional producer reduced their new prices by $70-90/ton after having come with rollovers last week.
In line with other markets, Middle Eastern PP prices to Turkey have also been emerging lower since the end of last week. When compared with the high end of the Middle Eastern PP range in May, new import offers from some mainstream Saudi Arabian suppliers so far indicate decreases of around $20-95/ton while further drops are expected amidst sluggish demand in the country.
Meanwhile, a Middle Eastern supply source reported offering their PP materials with significant discounts to Italy because they have high stocks which they want to sell out in order not to be caught amidst June decreases with high inventories.
