As local homo-PP market slumped, Chinese suppliers push for export

Both local and import homo-PP market in China has been slumping over the past six weeks after hitting the multi-year high levels during early October 2018. Data from CommoPlast showed a drop of an average $160/ton in the import prices and $170/ton in the local prices compared to the second week of October.   

The steep reduction is a result of a confluent factor including the correction in Dalian Commodity market, weakening upstream costs and easing local supply condition, sources said. Just before this report is published, traders lose more confidence in the near-term market outlook and decided to sell Indian homo-PP yarn at $1080/ton CFR China, LC AS term. This is the first time import homo-PP yarn to China breach below the $1100/ton in 12 months. 

“The sentiment is very heavy and we are not expecting the cyclical bottom yet,” a market source commented. 

The bleak outlook in this market starts encouraging export/re-export activities, which just to put more concern on the already shaky Southeast Asian region. Vietnamese buyers reported receiving export offers for regular Chinese homo-PP at $1150/ton FOB China, LC AS term that would translate to about $1170-1180/ton CIF Vietnam. 

“However, we have not received any response from buyers,” a Chinese producer added.

Meanwhile, a trader opens re-export offers for Indian homo-PP yarn at $1165-1175/ton CIF Southeast Asia, prompt cargoes from the bonded warehouse in Shanghai. “It is a very alarming condition that Chinese sellers re-exporting cargoes. We prefer to slow down and wait on the sideline for clearer outlook before committing to new purchases,” a regional buyer said. 

More Chinese traders might soon follow the move in the coming days would local ground continue to deteriorate. At the moment, the preparation for Lunar New Year demand has not emerged despite the fact that in 2019, Lunar New Year comes earlier than usual.