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Since early March, the PP market in China has been following the soft trend with bloated domestic inventories and weak demand that constantly keeping domestic materials at a more competitive position than import cargoes. This has put propylene cost under tremendous pressure despite a series of on-going cracker overhauls.

In fact, over the past week, propylene based on CFR China plunged nearly $60/ton on an average to reach $835/ton on last Friday. Industry participants believed that propylene would have to go down further to maintain the breakeven cost at $150/ton to convert to PP. On an average, local homo-PP in China today stands at CNY7850/ton ($987/ton without VAT), EXW China, cash term – which is just on par with the theoretical costs.  

A Chinese trader sold homo-PP yarn at CNY7650/ton ($962/ton without VAT), cash term said, “However, sustainability remains the major question. Many BOPP sheet makers are facing squeezed margins amid weak end product businesses and high raw material costs. Therefore, converters are not in the position of keeping stock.”

At the meantime, Chinese players reported that domestic PP inventories are still at comfortable side in spite of lower import arrivals in the past month. This would keep any possible significant up-trend on check, sources added. Besides, the propylene market does not appear to be as tight as in May, since limited availability is balanced by sluggish downstream demand. Following table show the number of cracker shutdown from May to August.