Due to the combination of increased regional supply and weak downstream demand, the Southeast Asian polypropylene market may face downward pressure in the second half of this year.
During most of the first half of the year, the spot price of PP in Southeast Asia has been on the rise channel, and the spot price has increased by nearly 10% in two months. Due to the influence of the Chinese market, the strong trend of PP price began to weaken at the beginning of March. People said that the two factors of increased supply and weak demand will cause downward adjustment pressure on the Southeast Asian PP market in the second half of the year, and prices will fall.
In Vietnam, Yishan Refining and Petrochemical Company plans to start a 400,000-ton/year PP production facility in the third quarter. Although Vietnam's domestic PP demand will continue to exceed domestic production, Vietnam’s dependence on imported PP will increase with the launch of new facilities. The degree will be reduced. A Vietnamese trader stated that buyers do not want to buy too many imported PP goods, not only because of the high prices of imported products, but also because more local PP goods will soon be available.
In Malaysia, Lotte Chemical Titan's PP expansion project in Pasir Gudang is expected to start operation from June to July. The PP capacity of the unit will be increased from the current 400,000 tons/year to 600,000 tons/year.
In addition, the supply of PP from South-East Asia in South Korea will also increase, as S-Oil's olefin downstream complex in the Ulsan Aoyama Refinery in South Korea will also be completed and put into production, which includes 405,000 tons/year of PP capacity.
According to market participants, PP demand in the Southeast Asian market will remain weak in the second half of this year, as PP downstream processors and end users will still maintain low PP raw material inventory levels. In particular, Indonesia's PP demand has been lower than expected since the beginning of this year. This situation may continue until the second half of this year.
The Malaysian government's cancellation of the 6% Goods and Services Tax (GST) has had no immediate impact on the PP market, although some analysts expect the move to further boost consumer demand. In Vietnam, PP flat yarn products are from May to May. In July, it entered the low season of demand, and it will not rise until after the summer harvest season in August.