China’s local PP, PE markets snap nine-week rally.
Petrotahlil - Despite positive economic data and rising Asian stocks, local PP and PE markets in China came under a downward pressure last week as a result of retreating Dalian futures and rising local inventory. This was soon reflected in prices and a stable to softer trend emerged this week, following the steady gains that had been reported since the second half of May.
HDPE and PP prices down on week
According to the ChemOrbis Price Index, the weekly averages of LDPE and LLDPE film prices on ex-warehouse China basis have been unchanged this week respectively at $1189/ton and $1034/ton.
HDPE film and PPH raffia and inj. offers on ex-warehouse China (VAT included) basis, on the other hand, have been down by $7/ton respectively at $1116/ton and $1112/ton.
PPBC inj. offers with the same terms have witnessed the largest weekly loss of $14/ton, standing at $1148/ton.
Support from Dalian fades
Limited demand and higher local inventory levels inside China have been pulling Dalian futures down recently.
LLDPE futures on the Dalian Commodity Exchange were down by CNY235/ton ($34//ton) on the week as of July 21.
PP futures also posted a slightly smaller weekly loss of CNY140/ton ($20/ton) within the same time period.
Meanwhile, market sources reported that two major local producers’ combined polyolefin supply was standing at 720,000 tons on July 21, up by 35,000 tons from Friday, July 17.
China welcomes new PP, PE capacities in 2020
In 2020, more than 1.5 million tons/year of PP and approximately 3.5 million tons of PE capacity are scheduled to be added to China’s production.
Being one of these new plants, China’s Sinopec Zhongke is readying to start up its new 550,000 tons/year PP unit in Zhanjiang by the end of August.
The expected expansion in China’s overall production is likely to weigh on PP and PE outlook, some players concur.
Import PP, PE prices remain largely stable
Defying the weakness in Dalian futures, import PP and PE markets in China have followed a largely steady trend this week with support from the ongoing tightness amid shutdowns.
While the markets are waiting for August PP, PE offers from both regional and overseas producers, availability issues are expected to remain a main determinant on sellers’ pricing policies.
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Source : ChemOrbis
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