China’s import PP, PE markets see low prices disappear

http://www.petrotahlil.com/en/tiny/news-43765

Petrotahlil :Rising crude oil futures coupled with positive news regarding the trade war have helped PP and PE sellers gather courage to adopt a firmer stance on their offers to China recently. This has resulted in a cautious rebound, with low prices disappearing from the market.

However, sellers’ hike attempts have largely been overshadowed by persistently weak buying sentiment so far. Meanwhile, the market outlook continues to be weighed on by oversupply fears as 2019 is drawing to a close.

Sellers try to push prices up for the third time since May

As can be observed in the ChemOrbis Price Wizard graph below, China’s import PP and PE markets have been mostly following a decreasing trend since May if the two short-lived rebounds in July and in September are disregarded.

The previous efforts to improve the market proved unsustainable in the face of sluggish demand and ample supplies with China-US trade tensions and macroeconomic uncertainties adding to the weakness.

This is the third time since May sellers have tried to push prices up in China. The import PE market hit an 11-year low two weeks ago before it edged slightly higher last week. Import homo-PP prices, meanwhile, have witnessed small gains this week after hitting their lowest levels since June 2016.

Offers forming the low end of price ranges fade away

Traders operating in China reported that the low ends of the import price ranges for PP and PE have disappeared from the market. “Suppliers issued small hikes of $10-20/ton on their offers to test the market response. Previous weeks’ competitive price levels are not obtainable now,” a trader said.

What has changed if supply remains ample, demand limited?

In terms of supplies, things are very much the same.

Local polyolefin supplies are still ample in China and upcoming PP and PE capacities both at home and overseas continue to cast a shadow over the 2020 outlook.

“We are not sure as to whether or not the recent hike attempts will prove workable since the market remains under pressure from ample global supplies. We expect the oversupply situation to linger into the first quarter of 2020 and play a crucial role in setting the tone of the market,” commented a trader.

Demand is not showing a remarkable improvement, either. Buyers in China remain cautious about making fresh purchases, preferring to stay sidelined to see if the market can extend its gains into the upcoming week.

“Plus, we have a one-week holiday on the way. Trading activity will gradually decrease in line with the approaching Chinese New Year,” sellers noted.

Trade positivity and rising crude oil at the crux of shifting sentiment

Positive news regarding the preliminary trade deal between China and the US following a 17-month long trade war has boosted sentiment.

“The deal has generated a wave of optimism. We hope that this will put an end to the prolonged bearish period in China’s polyolefin markets,” a few traders opined.

In the meantime, crude oil futures have extended their gains into the nine consecutive week, with January WTI (NYMEX) crude hitting a three-month high on December 17.

Source :ChemOrbis

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