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Purchasing activities in China has been weakening since late December 2016 and initial expectation was that pre-Lunar New Year replenishment activities should return by early this month, as buyers would wish to avoid any delivery disruption. However, it appears that demand is not coming back as strong as expected while many converters are departing for holidays this week.

In fact, traders are reporting thinner replenishment activities this year compared to previous year, which players attributed to the fact that prices have firmed up considerably year on year basis. According to CommoPlast data, on an average, import homo-PP to China in the first three weeks of this year is about 20% higher than the same period last year while local homo-PP is about 30% up.

A trader commented, “Prices higher this year thanks to the support from the energy market. However, the high prices also discourage buyers from keeping high inventories.”

Buyers hold a very strong sense of caution when it comes to building stock, claiming lack of new end product orders. A converter commented, “We have already offered discounts on end product prices to attract new orders and yet, our customers are rather reluctant. We have made some replenishment for raw material in the previous weeks and might only purchase additional quantity when we see more orders come in.”

At the meantime, it appears that the PP market in China is loosing steam with traders are releasing some of the quantity on hand before departing for the long holidays at competitive prices. Buyers therefore, would wait for concrete stabilizing factors to emerge as some have determined to restock before Lunar New Near starts.