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Since returning from the long Labour Day holiday, Zhongjing Petrochemical seems under pressure to deplete inventories amid the cloudy demand outlook. The maker introduces the second price cut in a span of three trading days today, sending homo-PP yarn below the $1000/ton threshold for the first time in months. 

The latest offers from the producer and changes from the previous offers are as follows:

The producer credited the underwhelming prices to the sluggish local market in China as buyers here prefer to stay on the sideline while key contracts on Dalian Commodity Exchange extend the downtrend. The cautious stance permeates the entire market, including overseas.

“We plan to only make purchases if the producer agrees to yarn and injection grades below the $1000/ton mark based on CIF terms. Looking at the demand in China, we expect more Chinese suppliers to lower their offers in the coming days,” a Vietnamese customer commented. 

Background:

Fujian Zhongjing Petrochemical is a subsidiary of China Soft Packaging Group Holdings Limited – a leading BOPP packaging products manufacturer in China. The company ventured into the upstream sector by building its first PP plant in 2012 and has been actively planning to expand the capacity since then.

Existing plants include two PP lines with a nameplate capacity of 1 million tons/year and a 750,000 tons/year propane dehydrogenation (PDH) unit based in Fujian, China. 

In 2018, the company signed a contract to use LyondellBasell’s 5th Generation Spheripol technology to build a new PP line with an estimated annual output of 1.2 million tons/year. The new plant is scheduled to come online between late 2022 to early 2023. 

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