China PP market rebound on strong sentiment and costs

The domestic homo-PP yarn market in China started to recover from the steep price correction, which stretched from mid of October to the end of November 2018 and send market to the all-time low this year. CommoPlast Price Index shows that the average local prices surged $45/ton week on week and provide a healthy support to the import ground.  

Sentiment improved significantly following the positive outcome from the trade talks between China and the USA on the 1 December 2018 in Argentina. Futures market increased 4.8% or CNY425/ton ($62/ton) compared to 30 November to close at CNY9209/ton ($1157/ton without VAT) on 4 December 2018. This has supported the local ground to a certain extent. 

“Our customers are rather active. Even at higher price levels, we are still receiving a satisfactory number of inquiries,” a trader commented.

Such positive development might persist in the near term, sources said, pointing to the fact that most suppliers have depleted a considerable amount of inventories and currently free from major sales pressure. “The year-end sales season might have ended. Sellers have the incentive to hold firm on prices now,” another market source added.

The import market is gaining momentum, too, but attempt to lift prices in a large range is not yielding good results. Prices below or at the $1000/ton mark based on CFR China term are no longer available this week; instead, most yarn prices are now at $1030/ton and above.

“We managed to conclude more quantity of Vietnamese homo-PP at $1130/ton CFR China, up $30/ton from the beginning of the week. At the moment, we lifted offers to $1150/ton for the remaining small quantity,” an international trade reported. 

In the upstream propylene market, prices bottom out and surged $20-30/ton from last Friday to $835/ton FOB South Korea and $911/ton CFR China on 4 December.