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For three week in a row, local homo-PP yarn market in China has been constantly climbing higher on the back of improved demand condition coupled with necessary stimulation from the futures market.

Data from CommoPlast suggests that compared to the beginning of June, local homo-PP yarn prices based on EXW China term surged $70/ton on an average. 

In the same time period, total inventories at Sinopec and CNPC’s warehouses fell about 20% to 665,000 as on 4 July 2019, signalling an uptick in demand in the country. Both producers have spent months following the Lunar New year to bring the total inventories to below the 800,000 tons psychological threshold but have not been able to achieve until now.

“Arbitrage traders are especially active over the past week thanks to the positive futures market,” a market source informed. Meanwhile, it is reported that many Chinese manufacturers prefer to procure cargoes based on need basis amid the persistently soft end product demand. 

In line with the drastic upswing in the domestic ground, international suppliers have also adopted a rather firm stance on import offers to the country. At the time this report is published, offers for homo-PP yarn based on CFR China below the $1050/ton threshold have become very scarce.

A buyer said, “Russian homo-PP surge $30/ton from the beginning of the week to $1050/ton. We purchased some quantity due to concern that the market might advance further in the coming week.”

It is important to note that the Chinese homo-PP yarn market is now normalized; in which cargoes traded in local terms have regained the premium over imports. 

A number of industry participants started to question the rebound trend in the Chinese PP market, saying that players might have over-reacted to the news on China-USA trade truce and rising energy complex. “China and the USA are still tangled in a various number of other issues. As long as the USA maintain all the previous tariffs on Chinese imports, it could slow down demand [for raw material] from Chinese exporters,” said, a Chinese based analyst.

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