PPFY Prices Edge Up in Asia as Demand Strengthens and Feedstock Costs Fall

In August 2024, prices for Polypropylene Filament Yarn (PPFY) remained strong in the Asian market, primarily due to improving demand and a rise in export orders. Since early July, PPFY prices have followed a positive trend in the Indian market. In August, PPFY prices in India saw a slight increase of 0.7%, fluctuating within an upward range. Despite this rise, the cost of feedstock Polypropylene decreased by 1.5% due to trends in upstream products.

The global crude oil market, which had passed its peak season in the U.S. by the end of August, experienced a decrease in oil prices, which in turn loosened pricing pressures on feedstock Polypropylene. While these trends suggested stability, expectations of potential interest rate cuts by the Federal Reserve and delayed OPEC+ production plans hint at possible future rebounds in PPFY prices. Early-stage propylene shipments faced significant pressure, with limited improvement in the market and a recent decline.

Since the start of 2024, international crude oil futures prices have gradually fallen due to supply-demand imbalances, lowering prices of key raw materials such as asphalt, purified terephthalic acid, and methanol. This price drop has benefited sectors like coatings, chemicals, textiles, and dyeing, which are major users of PPFY. As of September 6, 2024, global crude oil prices remained low, with West Texas Intermediate crude oil priced at $68.58 per barrel. This marked a decline of $5.94 from the previous week and $18.93 from a year ago, amidst rising U.S. inventory levels, according to EIA data.

Demand for PPFY remained strong in the Asian market during this period, partly fueled by political unrest in Bangladesh. According to the General Administration of Customs in China, textile and clothing exports from January to August reached USD197.77 billion, a year-on-year growth of 1.1%. While the growth rate slowed compared to the first half of the year, it still reflected steady demand for PPFY. In India, the Tiruppur knitwear export hub secured INR450 crore in export orders in just two weeks, redirecting orders from Bangladesh due to the political crisis there. Global brands such as KiK from Germany, Zeeman from the Netherlands, and Pepco from Poland placed orders for garments to be delivered before Christmas and New Year, according to the Tiruppur Exporters' Association. Additionally, the Apparel Export Promotion Council's southern region head mentioned that several global brands have shifted their orders from Bangladesh to India, further boosting demand for PPFY.

In conclusion, analysts anticipates that the Asian PPFY market will likely maintain its positive trajectory in the coming months. Domestic demand for PPFY is expected to remain moderate, affected by lower discretionary spending and overstocking from the previous fiscal year. However, the outlook for PPFY exports is promising, with signs of recovery in global demand. The domestic market may also see a boost in the second half of FY25, driven by the festive season and an increase in weddings, though price gains for PPFY are expected to be marginal.