Abstract:

　　In Asia, the recent upward swings observed in crude oil and spot propylene prices have　driven PP buyers to return to the market to make fresh purchases. While sellers　acknowledged that they are seeing better demand at the start of the week, sellers remained　cautious in their optimism as they remain skeptical of the medium term outlook for the　market.

　　Crude oil futures on the NYMEX gained $2.44/barrel over the past week to settle slightly　below their intra-week high at $78.98/barrel on Friday, with most of the rise in crude oil　price occurring towards the end of the week. Along with the rise in crude oil prices, spot　naphtha prices on a CFR Japan basis gained $38/ton over the past week, with most of the　increases once again occurring towards the end of the trading week. Rising energy costs　combined with renewed supply concerns following outages at Samsung Total's petrochemical　complex in Daesan and Formosa's cracker in Mailiao led to a rally in the spot propylene　market, with prices jumping $30/ton on FOB Korea basis over the past two trading days. 

　　While the outage at Samsung's facility is expected to be resolved quickly, Formosa has　announced plans of reducing the operating rates of its PP plants by 30% after a second fire　broke out at the Mailiao facility over the weekend.

　　In China, a distributor reported that they raised their offers for locally-held copolymer　PP by CNY300/ton ($44/ton) as they have been receiving a good number of price inquiries　from their customers. Domestic producers also reported seeing better buying interest from　their customers, with producers commenting that they have altered their pricing policies　such that they are no longer offering retroactive discounts to their customers given the　recent increases seen in upstream costs. On Monday, a major domestic producer announced a　price increase of CNY500/ton ($74/ton) on their offers to East China, citing rising　distribution market prices and improved buying interest as the reasons for their price　increases.

　　In Southeast Asia, buyers have also shown renewed interest in the market owing to higher　energy prices and increasing prices in China's domestic market. Converters in the region　reported receiving import offers at prices stable to $20/ton higher from the past week,　with a few converters electing to make some purchases to cover their immediate needs.

　　While converters have become more active in the market, they commented that they are still　wary of purchasing in large quantities as many of them suspect that the current rise in　prices will ultimately prove to be temporary.

　　Indonesian producers reported that they left their offers to the local market unchanged　this week, preferring to observe market developments for a while longer before making their　next move. However, several distributors in the country stated that they are no longer　willing to give discounts from the producer price level, with one producer source　commenting that they would not be surprised to see distributors offering above the producer　price level in the current conditions.