Chinese players: PP overhaul provides little support to local market

Since Lunar New Year, demand in China has yet to show any improvement, which resulted in record high inventories levels, pressurizing domestic prices to take downward path.

CommoPlast data shows that compared to early February, local homo-PP yarn in China has plunged CNY800/ton ($116/ton) this week, bringing the latest prices to reach the lowest level of CNY8000/ton including VAT, EXW China term, which is equivalent to $990/ton without VAT wit the same term. Import homo-PP to the country therefore, facing tremendous difficulty in attracting buying interest.

This take place even with a good number of PP plants within China undertake maintenance shutdown in February and March. The following table shows the detailed overhaul schedule at these plants.

A total of eleven (11) plants with known shutdown duration accounted for an estimated production loss of nearly 173,000 tons from February to March. In a normal market condition, this could stimulate the general sentiment and support prices. However, the impact has yet to show this time.

A trader commented, “The main issue is that converters are not having sufficient end product orders, which in turn discourages restocking activities. Market might need more time to digest the current inventory and in the immediate term, prices might still face pressure.”

In fact, it is report that traders are cutting import homo-PP prices for Saudi Arabia origin to China by $50-60/ton from last week to reach $1050-1060/ton CFR China, LC AS term. “Our customers are not showing interest in import material as local cargoes are much more competitive now. However, in the medium term, lack of import cargoes arrival could cause serious supply tightness.”