Southeast Asian Import PP Prices Reach Five-Year Highs, Leaving PE Behind

Import prices of PP and PE across Southeast Asia have continued to rise since mid-July, supported by elevated energy and feedstock costs as well as supply uncertainties. However, PP has recorded a much stronger increase than PE, with tighter availability and mounting production cost pressures providing additional support to sellers.

The difference between the two markets has become increasingly evident in recent weeks. PP prices have recovered their April peaks and climbed to multi-year highs, whereas PE prices remain below the levels reached during the sharp rally earlier this year. Diverging upstream trends, supply conditions and sellers’ pricing strategies have contributed to this widening gap.

PP Surpasses April Peaks as PE Remains Below Previous Highs

Southeast Asian import prices for homo-PP raffia, injection and PPBC injection reached their highest levels since March 2021 in the week ending November 6. The latest increases pushed prices above the peaks recorded during the sharp rally following the outbreak of the US-Iran war earlier this year.

This marks a significant recovery from the correction that followed the April rally, with PP prices not only regaining their previous highs but also extending their upward movement into early November.

PE has followed a comparatively weaker path. Although all three major PE film grades have advanced since mid-July, their latest prices remain below the highs established during the initial war-driven surge.

Compared with their early-April peaks in Week 15, HDPE and LLDPE film prices were still around 7-8% lower. LDPE film was approximately 9% below its mid-April peak recorded in Week 16.

PP’s Discount to LDPE Narrows While Its Premium Over Other PE Grades Widens

The stronger PP rally has significantly changed the price relationships between the two polyolefins.

Homo-PP raffia and injection continued to trade below LDPE film, but the discount narrowed to just $85/ton in early November. This was the smallest difference since late January 2024, approximately half the gap recorded during September-October and considerably below the exceptionally wide $373/ton discount seen during the previous rally in April.

The situation has been different for HDPE and LLDPE film, both of which have moved further below homo-PP.

HDPE film remained cheaper than homo-PP for three consecutive weeks, with the discount widening to $83/ton in early November, its largest since October 2021. Meanwhile, LLDPE film has traded below homo-PP since late April, and its discount reached $93/ton, the widest since July 2021.

Stronger Propylene Gains Increase Cost Pressure on PP Producers

Different movements in upstream feedstocks have played an important role in the contrasting performances of PP and PE.

Spot ethylene prices on both CFR China and CFR Southeast Asia bases climbed to around six-month highs. Propylene, however, recorded considerably stronger gains. CFR Southeast Asian prices moved beyond six-month highs, while CFR China values reached unprecedented levels.

The propylene rally gathered pace in October amid severe regional supply tightness and aggressive short-covering, pushing its premium over ethylene to historically high levels.

On a CFR China basis, the propylene-ethylene spread reached $195/ton in October, its widest since April 2020. In Southeast Asia, the spread climbed to a record $200/ton. Although both differences subsequently narrowed, they remained elevated at approximately $180/ton in early November.

The widening spread highlighted the growing cost burden on producers dependent on merchant propylene and the increasingly challenging economics of propylene-based production.

With feedstock expenses rising sharply and margins already under pressure, PP suppliers faced stronger incentives to increase selling prices or reduce production. These conditions provided PP with greater cost support than PE, widening the performance gap despite continued resistance from buyers.

Chinese PP Suppliers Push Offers Higher While PE Sellers Remain More Cautious

Chinese suppliers have been among the most aggressive in increasing PP offers across Southeast Asia, reflecting higher production costs and tighter domestic availability.

Elevated crude oil and propylene costs, together with earlier strength in Dalian PP futures, added to margin pressure for Chinese producers. Production cuts and maintenance shutdowns further restricted supply, with around 24% of China's PP capacity reportedly offline in late October.

As replacement costs increased, Chinese sellers placed greater emphasis on protecting margins rather than maximizing export volumes. Their successive price increases reinforced the firm market trend across Southeast Asia, encouraging other PP suppliers to maintain or raise offers amid limited availability and elevated replacement costs.

PE suppliers, in contrast, generally adopted a more measured approach. Middle Eastern producers continued to face logistical uncertainties and disruptions to regional supply flows. However, alternative shipping arrangements, including routes through Oman, allowed some suppliers to maintain deliveries to Southeast Asian destinations.

Irregular shipments and higher freight expenses supported PE offers, but the resulting price increases were generally less significant than those in PP.

US suppliers also retained a relative cost advantage, particularly in ethane-based PE production. This allowed them to offer cargoes more competitively and gave Southeast Asian buyers an alternative to higher-priced shipments from other origins, limiting the pace of PE price increases.

Differences in feedstock economics, supply availability and export pricing strategies have therefore played a major role in the widening gap between the two markets.

Falling Crude Oil Adds Uncertainty as Buyers Resist High Prices

Despite PP's stronger performance, downstream demand has remained subdued across both markets. Buyers have largely restricted purchases to immediate requirements, following hand-to-mouth procurement strategies and avoiding substantial inventory commitments amid high prices and uncertainty over the sustainability of the rally.

Elevated resin costs have also squeezed converter margins, while weak demand for finished products has limited their ability to pass higher raw material expenses on to customers.

The sharp decline in crude oil prices in early November has added another source of uncertainty. Following the steep sell-off in energy markets, buyers have become increasingly reluctant to commit to fresh purchases at prevailing polymer prices. Many anticipate that lower energy costs could eventually ease suppliers' pricing pressure.

Overall, PP continues to outperform PE due to tighter supply and stronger propylene-related cost pressures. However, subdued demand, margin constraints and falling crude oil prices could challenge the continuation of the upward trend across Southeast Asia's import markets.

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