Demand in local China fostered on pre-Lunar New Year replenishment

Chinese players reported seeing a drastic pick up in purchasing activities on the second trading day of the week, which motivated traders to lift their PP and PE offers by CNY100/ton ($14/ton) compared to yesterday. This marks the start of pre-Lunar New Year replenishment activities, some players said, with the come back of futures trading market.

A Linyi based trader active in trading PE film said, “Our customers in the agricultural film sector are making purchases very actively. We have implemented CNY100/ton ($14/ton) hike on local cargoes and if this tempo persist, further price increment in very possible.”

Couples of major coal based producers have reportedly suspended their offers and might only open January prices in the coming week. “We have no cargoes left on hand and therefore we concluded business for the year now. Our principal supplier would only open new prices after the holidays, yet we expected market to remain on the firming track at least for the first half of January.”

Despite healthy demand and low inventories at the suppliers’ side, market participant are not seeing homo-PP prices to surge significantly in the near term. One justification players are looking at is that converters are still facing difficulties in lifting end product prices, which squeeze their profit margins.