Chinese players: Pre-holiday replenishment activities remain weak

As Lunar New Year draws near, many converters in China are reportedly slowing down operating rate to allow workers to leave for holidays, and there is still no sign of a pick up in replenishment activities. Traders are expressing their disappointment towards the demand condition, which is expected to sustain throughout this week.

A medium-scale packaging converter commented, “We are not planning to keep too high inventories during the holidays as we have not received new orders for our end product. Our plant would stop operating by third week of the month, hence we might only source some small quantity from local market.” Couple of other converters meanwhile believed that prices are still not at the right levels to make large purchases at the moment.

Weak demand in local market has also spilled the effect to import ground that dutiable homo-PP cargoes above the $1050/ton CFR China attract no buying interest. “Buyers have made sufficient purchases for import cargoes and the remaining would come from the local supply pool,” a market source informed.   

Players fear that such sluggish condition might sustain throughout this month and that post-holiday outlook appears to be promising for LLDPE film. A trader based in northern area informed, “Seasonal demand for mulch sheet might kick off in February and we hope this would stimulate demand condition.”

Market sources reported some build up in local inventories this week and though demand might gradually fade in the coming week, suppliers might not face tremendous sales pressure given a prolong period of holding multi year low inventory level. Besides, there are a number of plants undergo maintenance shutdown in late quarter 1, which would give suppliers a good reason to keep their cargoes.