Chinese players: Import PP and PE seems to have reached the peak

Import PP and PE to China has been steadily firming up since mid to late July this year amid tightening supply both domestically and internationally. Data from CommoPlast showed that compared to the bottom levels reported during July, the average import prices for HDPE, LLDPE and homo-PP have jumped about 14-17%. Both HDPE film and homo-PP yarn has reached the highest level since beginning of the year.

This week, however, buying interest slow down visibly as buyers resisted the rapid climbing trend, citing difficulties facing in transferring higher raw material costs to end product prices. Meanwhile, plunging futures prices on Dalian Commodity Exchange also contributed to the weakening buying interest.

A trader offered Indian HDPE yarn at $1260/ton CFR China, LC AS term, a $40/ton below initial sell idea after receiving disappointed feedback from the buyers side. Several deals for the cargoes are reported at $1230/ton with the source informed, “Too high prices shy buyers away. Suppliers are not facing sales pressure, hence many prefer to hold firm stance. However, buyer acceptance is not catching up.”

Couple of other Middle Eastern and Southeast Asian suppliers are attempting to hold PE offers at $1300/ton mark and above, yet the number of deals concluded are minimal. “Unless there are discounts available, it is less likely that buyers would accept such high prices at the moment,” a market source informed.

Similar situation is observed in the PP sector, in which import offers at $1200/ton mark and above can attract only few deals. Meanwhile, Indian homo-PP is concluded at $1150-1160/ton CFR China term, mostly to northern area. “Supply for PP in northern market is tighter than other areas, though we think the price cycle is nearing the peak this round,” a trader said.

Besides, discussing with a number of traders in Eastern China market, mostly have depleted available inventories over the past weeks, and yet refused to make replenishment at the current market levels. “The thing is, futures market is falling after two consecutive weeks of surging, and if this condition persist, buying interest might continue to perish,” another trader added.

Market is blanketed by a strong sense of caution. While buyers are resisting prices above the $1300/ton threshold for PE and $1200/ton for PP, very few expressed the expectation for a downtrend, thanks to limited supply. In contrast, if futures market revive from the recent price correction, converters might have limited choices but to accept high price levels.