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As reported earlier, the local homo-PP market in China has been constantly moving lower since hitting the multi-year high level during late January 2018. Five consecutive weeks of decreasing have wiped away CNY600-700/ton ($95-110/ton) in value, bringing domestic offers to CNY8600-9250/ton ($1163-1250/ton without VAT), EXW China, cash equivalent, as of 15 March 2018.

The market condition is not expected to revive in the immediate term as many converters are still struggling to restore regular operating rate amid lacking manpower, leading to bloated inventories levels among sellers. Many Chinese traders are attempting to export cargoes to other markets to protect margins and reduce pressure.

Falling local market started to drag import offers down. Offers for Indian and Russian homo-PP witness $20-30/ton reduction week on week to $1220-1230/ton CFR China, LC 0-60 days term. “Our customers are not showing interest in import material given the availability of highly competitive local cargoes. Tight supply from overseas suppliers is clearly unable to hold the market,” a trader in Qingdao informed.

Looking at historical data, domestic China market usually softens after the long Lunar New Year holiday due to accumulated inventories and weak demand. In 2017, domestic homo-PP prices fell sharply right after the Lunar New Year in early February and remained below import market for nearly seven consecutive weeks before rebounded in early May. Market participants, therefore, are questioning if the current prices are nearing the bottom or would it take longer than last year to revive?

There have been some inexplicit indications that local suppliers started to take a firmer stance on the cargoes as futures market regains strength in recent trading sessions. “Both major local producers withdraw offers today hoping to lift prices tomorrow. However, whether this momentum could last, it remains debatable as converters have yet to come back,” a trader said.