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Key Chinese PP producer Zhongjing Petrochemical opened fresh export PP offers for the week with a $10/ton increment, citing the low sales pressure and the resilient futures contracts on the Dalian Commodity Exchange prevalent throughout the previous week.

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

The price hikes are well-expected, market sources said, after a number of Chinese homo-PP cargoes were concluded at $920-930/ton FOB China in the previous week. Besides, the resilient domestic Chinese market also lends support to the price decision.

“Offering at these levels means very thin margins considering the narrow price gap with the domestic market. The producer is being conservative even though trading sentiment overseas started picking up,” added, a Southeast Asian market participant. Export offers usually carry a premium of at least $50/ton over cargo selling based on local terms.

No immediate deals are concluded at the time of this report, though, it is expected that other Chinese suppliers might follow suit to introduce small to moderate price hikes in the coming days.

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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