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Chinese players resumed working after the weeklong Spring Festival to see a drastic surge in PP and PE inventories at major local producers’ warehouses. At the time this report is published, it is reported that PP and PE stocks rose to 1.085 million tons at Sinopec and CNPC’s warehouses, the highest levels since 2014. This figure is expected to continue to increase in the coming days given the fact that trading activities remain sluggish in the country in the absence of buyers.  

Higher inventories levels and slow digestion rates seem to take tolls on the prices. Spot homo-PP yarn offers witness two consecutive days of reduction, amounted to CNY200-250/ton ($29-37/ton) drop from the pre-holiday week. Local regular homo-PP yarn cargoes are now at CNY8900-9300/ton including VAT (or $1133-1190/ton without VAT), EXW China.

The weakness in the domestic ground is casting effect on the import market, where all attempts to maintain offers on the firming track are facing tremendous resistance.

Saudi Arabia and Indian homo-PP initially offered at $1080/ton CFR China, LC AS, but deals are seen at $20/ton lower, highlighting the difficulties overseas sellers face in lifting prices. 

“We purchased 400 tons of Saudi cargoes after the discount. Depending on the state of demand in the coming week, we think most buyers would become more cautious until the trade talks between China and the USA show more positive sign,” a trader reported.

Suppliers are hoping to see better transactions in the coming week, once more converters return to work after the Chap Goh Mei festival on 19 February. But again, buyers might prefer to wait for the outcome of the trade talks between China and the USA government.

“We might source more cargoes from the local market first. At the current supply condition, we might have better bargaining power. Middle Eastern suppliers are too firm, that make prices less attractive,” a buyer added.

Moving forward, Zhanjiang Dongxing, Dalian Xitai, and Shenhua Ningxia Coal is planning 40-60 days shutdown at their PP plants in March and April, which might tighten local supply to a certain extent. Yet, the effect might be undermined would demand shows no improvement. 

Click here to check the maintenance shutdown schedule at local PP plants in China. 

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