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Domestic homo-PP market in China has been following the down trend since late January 2018 and continue to gallop lower this week though most buyers have returned to work after the long Lunar New Year holidays.

Compared to the peak recorded during the final week of January 2018, the average local homo-PP prices in China, based on EXW, cash equivalent has fallen nearly $70/ton, to CNY‎‎‎‎9050-9150/ton ($‎‎‎1222-1235/ton without VAT). In contrary, import offers to the country in the same period remain very firm, thanks to limited supply stemming from a series of plant issues across the globe.    

As a result, import materials have gained a premium over local cargoes of approximate $50/ton, which explains the lack of purchasing appetite for deep-seas parcels in recent days despite the persistent supply tightness. The situation has also encouraged Chinese PP producers to divert their cargoes to overseas markets after a long absence.

However, trading activities in local ground might gradually pick up in the coming days as most buyers have resumed working after the Chap Goh Mei Festival, Chinese traders said. “Total PP and PE inventories at domestic producers’ warehouses after the holidays are not as high as previous years while converters are not carrying high stock. Replenishment become inevitable in the coming days,” a trader said.

In fact, a number of traders in Southern China area are witnessing an improved in demand condition on the first trading day of this week, just yet, other areas might take a little longer to catch up. Having said so, Chinese players are not expecting any major upswing in term of prices considering the weakness in the upstream propylene market.