- Concern over second-wave of coronavirus outbreak dents market sentiment
- Import PP Homo Raffia offers recorded an increase of triple digits
- New capacities to come on stream, a bump in supply is expected
China’s polypropylene (PP) market faces immense downward pressure in June as consumption enters a seasonal demand lull, coupled with concerns over a second wave of coronavirus infections could compel governments to implement another stringent lockdown measures. Despite the concern, China’s domestic PP prices have gained some strength over the month, backed by firmer energy market and supply shortage. In the week commencing June 1, local traders in China have separately announced increases of CNY100/ton ($14/ton) for PP Homo Raffia from a week earlier, citing an uptrend in the futures market. In the following week, the majority of Chinese suppliers set off a round of price cuts to the domestic market as futures prices took a breather from the recent rally. On a week-to-week basis, local PP Homo Raffia and PP Homo Injection prices edged down between CNY100-600/ton ($14-85/ton). Moving to the third week, local PP prices in China hold firm amid tight supply. In the particular week, a local polyolefins producer in the country instituted a price increase of CNY50/ton ($7/ton) for PP Homo Raffia and PP Homo Injection cargoes as compared to last week’s level, owing to supply constraint. In the final week of June, SSESSMENTS.COM was informed that local PP prices on an Ex Works (EXW) China basis were up between CNY25-50/ton ($3.5-7/ton) over the same period, holding firm on the back of relatively tight supply in the market and firmer futures market.
China saw PP prices trending higher in the import market during June, shifting in the same trend from the previous month, buoyed by a relentless rally in crude oil prices. For Southeast Asia origin, a Malaysian polyolefins producer announced July shipment offers to the China market with a hefty price increase of between $30-80/ton for PP Homo Injection, PP Homo Raffia, PP Block Copolymer, and PP Random Copolymer Blow cargoes. As for Far East Asia origin, July shipment offers for PP Block Copolymer from a South Korean producer surfaced with a significant increase as much as $100/ton compared to the same period. On a weekly basis, China’s import PP prices gained a cumulative increase of between $20-50/ton. Sources in China revealed to SSESSMENTS.COM that most foreign producers found difficulties to offload the cargoes in China market as the majority of buyers were showing a stiff resistance toward high import offers since prices have been moving higher rapidly.
Demand-wise, market participants informed SSESSMENTS.COM that downstream PP consumption in China has declined throughout June due to the fallout from the coronavirus outbreak, coupled with seasonal slowdown in domestic demand. Traditionally, downstream demand for PP will enter into a seasonal lull in June, with buyers currently purchasing on a hand-to-mouth basis only, unwilling to build inventories. Besides, concerns over a second wave of coronavirus infections is hitting China’s economy as it emerges from lockdown. Beijing, the capital of China, is bracing for a second wave of the pandemic following a spike in untraceable local infections and imported cases in the region, which forced the Chinese capital to reimpose a lockdown restrictions and reinstated some anti-epidemic controls. Further added, new signs of a resurgence of coronavirus infections led to low purchasing power from the end-user segment, triggering a chain reaction of low demand. Supply in China’s domestic PP market remains tight since mid-May on the back of slew of turnarounds scheduled at local PP plants. In the final week of June, activity in the China’s PP market was muted, with limited spot trades taking place as the majority of Chinese market players were away from their desks for the Dragon Boat Festival holiday, which falls on June 25 and lasts until June 27 this year. As of June 24, inventory level of the two leading Chinese polyolefins producers recorded at 655,000 tons, posting a reduction of 100,000 tons as compared to Monday’s level (June 22). As compared to the beginning of the month (June 1), the figure showed a significant reduction of 175,000 tons.
On the plant news, SSESSMENTS.COM demand and supply database noted that Liaoning Baolai Petrochemical, a petrochemical company in northeast China's Liaoning Province, plans to conduct a trial run at its two PP lines with each a capacity of 300,000 tons/year on July 20, 2020. Likewise, Zhongke Petrochemical, a part of Zhanjiang Integrated Refinery and Petrochemical Complex, is also planning to start up its new PP units in July. The producer’s two PP units with a total capacity of 550,000 tons/year is located in Zhanjiang, Guangdong Province, China.
Looking ahead, market participants in China have mixed views on PP price outlook. Some sources expect local and import PP prices will remain firm in the days to come, backed by tight availability of spot domestic cargoes and uptrend in the international market on the back of firmer propylene prices, albeit most buyers show a stiff resistance towards the high prices. However, others voiced out to SSESSMENTS.COM that a possible bump in supply could have a dampening effect on the rally, taking into account the new capacities that is slated to come on-stream in the near term and influx of imported materials will arrive by the end of June or early July.
Range of local PP offers between June 1 to June 5 on cash, EXW China basis (including 13% VAT in CNY term, all equivalent in USD excluding VAT)
| Origin | Product | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | PP Homo Injection | Price List | 7,800-8,000 | 975-1,000 |
| China | PP Homo Raffia | Offer Given | 7,700-8,050 | 962-1,004 |
| China | PP Homo Raffia | Price List | 7,600-8,000 | 950-1,000 |
| China | PP Impact Copolymer | Price List | 7,900-8,100 | 987-1,012 |
| China | PP Random Copolymer Injection | Price List | 7,900-8,600 | 987-1,075 |
Range of import PP offers between June 1 to June 5 on LC at sight, CIF China Main Port basis
| Origin | Product | Transaction Type | Offers (USD/ton) |
|---|
| Far East Asia | PP Block Copolymer | Offer Given | 940* |
| Far East Asia | PP Block Copolymer | Offer Received | 920*-940* |
| Southeast Asia | PP Homo Injection | Offer Received | 940 |
| Middle East | PP Homo Raffia | Buy Idea | 830**-850** |
| Indian Subcontinent | PP Homo Raffia | Offer Given | 900 |
| Middle East | PP Homo Raffia | Offer Given | 810-830 |
| Southeast Asia | PP Homo Raffia | Offer Received | 940 |
| Indian Subcontinent | PP Homo Raffia | Sold | 900 |
| Southeast Asia | PP Random Copolymer Injection | Offer Received | 1,070 |
Description: *Offers for June shipment **Buy idea submitted by re-exporter, prompt delivery
Range of local PP offers between June 8 to June 12 on cash, EXW China basis (including 13% VAT in CNY term, all equivalent in USD excluding VAT)
| Origin | Product | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | PP Homo Injection | Offer Given | 7,750-8,050 | 965-1,004 |
| China | PP Homo Injection | Price List | 7,900-8,600 | 987-1,075 |
| China | PP Homo Raffia | Offer Given | 7,650-8,050 | 954-1,004 |
| China | PP Homo Raffia | Price List | 7,700-8,000 | 962-1,000 |
| China | PP Impact Copolymer | Price List | 8,100 | 1,012 |
| China | PP Impact Copolymer Injection | Price List | 8,100-8,200 | 1,012-1,023 |
| China | PP Random Copolymer Injection | Price List | 8,200-8,600 | 1,023-1,075 |
Range of import PP offers between June 8 to June 12 on LC at sight, CIF China Main Port basis
| Origin | Product | Transaction Type | Offers (USD/ton) |
|---|
| Far East Asia | PP Block Copolymer | Sold | 940* |
| Middle East | PP Block Copolymer | Offer Received | 1,080 |
| Southeast Asia | PP Block Copolymer | Offer Given | 1,000** |
| Central Asia | PP Homo Injection | Offer Received | 860-870 |
| North America | PP Homo Injection | Offer Received | 850 |
| North America | PP Homo Injection | Purchased | 840 |
| Southeast Asia | PP Homo Injection | Offer Given | 940** |
| Central Asia | PP Homo Raffia | Offer Received | 860-870 |
| Indian Subcontinent | PP Homo Raffia | Offer Given | 850 |
| Indian Subcontinent | PP Homo Raffia | Offer Received | 900 |
| Middle East | PP Homo Raffia | Offer Received | 900 |
| Middle East | PP Homo Raffia | Purchased | 890 |
| Southeast Asia | PP Homo Raffia | Offer Given | 940** |
| Southern Africa | PP Homo Raffia | Offer Received | 860 |
| Southern Africa | PP Homo Raffia | Purchased | 860 |
Description: *Offers for June shipment **Offers for July shipment
Range of local PP offers between June 15 to June 19 on cash, EXW China basis (including 13% VAT in CNY term, all equivalent in USD excluding VAT)
| Origin | Product | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | PP Homo Injection | Offer Given | 7,900-8,150 | 987-1,017 |
| China | PP Homo Injection | Price List | 7,900-8,100 | 987-1,012 |
| China | PP Homo Raffia | Offer Given | 7,800-8,100 | 975-1,012 |
| China | PP Homo Raffia | Price List | 7,750-8,150 | 965-1,017 |
| China | PP Homo Raffia* | Sold | 7,850-7,860 | 979-980 |
| China | PP Impact Copolymer Injection | Price List | 8,100-8,200 | 1,012-1,023 |
| China | PP Impact Copolymer Injection | Sold | 8,600 | 1,075 |
| China | PP Random Copolymer Injection | Price List | 8,200-8,600 | 1,023-1,075 |
Description: *Offers for coal based PP cargoes
Range of import PP offers between June 15 to June 19 on LC at sight, CIF China Main Port basis
| Origin | Product | Transaction Type | Offers (USD/ton) |
|---|
| Far East Asia | PP Block Copolymer | Offer Given | 980* |
| Middle East | PP Block Copolymer | Offer Received | 1,130 |
| Southeast Asia | PP Block Copolymer | Sold | 980 |
| Middle East | PP Homo Film | Offer Received | 980 |
| Far East Asia | PP Homo Injection | Offer Given | 950* |
| Middle East | PP Homo Injection | Offer Received | 930 |
| Southeast Asia | PP Homo Injection | Offer Received | 950*-960* |
| Far East Asia | PP Homo Raffia | Offer Given | 950* |
| Middle East | PP Homo Raffia | Offer Given | 900-930 |
| Middle East | PP Homo Raffia | Offer Received | 870-930 |
| Southeast Asia | PP Homo Raffia | Sold | 920* |
Description: *Offers for July shipment
Range of local PP offers between June 22 to June 26 on cash, EXW China basis (including 13% VAT in CNY term, all equivalent in USD excluding VAT)
| Origin | Product | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | PP Homo Injection | Offer Given | 8,075-8,150 | 1,007-1,017 |
| China | PP Homo Raffia | Offer Given | 7,850-8,150 | 979-1,017 |
Range of import PP offers between June 22 to June 26 on LC at sight, CIF China Main Port basis
| Origin | Product | Transaction Type | Offers (USD/ton) |
|---|
| Far East Asia | PP Block Copolymer | Offer Received | 950-990 |
| Middle East | PP Block Copolymer | Offer Given | 950 |
| Indian Subcontinent | PP Homo Injection | Offer Received | 910-920 |
| Far East Asia | PP Homo Raffia | Offer Given | 900 |
| Indian Subcontinent | PP Homo Raffia | Offer Received | 920 |
| Middle East | PP Homo Raffia | Offer Received | 930 |
Description: *All offers for July shipment
Range of local PP offers between June 29 to June 30 on cash, EXW China basis (including 13% VAT in CNY term, all equivalent in USD excluding VAT)
| Origin | Product | Transaction Type | Offers (CNY/ton) | Equivalent in USD/ton |
|---|
| China | PP Homo Injection | Offer Given | 8,075-8,150 | 1,007-1,017 |
| China | PP Homo Injection | Price List | 7,800-7,900 | 975-987 |
| China | PP Homo Raffia | Offer Given | 7,800-8,150 | 975-1,017 |
| China | PP Homo Raffia* | Offer Given | 7,630 | 953 |
| China | PP Homo Raffia | Price List | 7,800-8,150 | 975-1,017 |
| China | PP Impact Copolymer Injection | Price List | 8,100-8,200 | 1,012-1,023 |
| China | PP Random Copolymer Injection | Price List | 8,300-8,700 | 1,037-1,087 |
Description: *Offers for coal based PP cargoes
Range of import PP offers between June 29 to June 30, CIF China Main Port basis
| Origin | Product | Transaction Type | Offers (USD/ton) | Payment Term |
|---|
| Middle East | PP Block Copolymer | Offer Given | 950*-970* | LC at sight |
| Southeast Asia | PP Block Copolymer | Offer Received | 1,070 | LC at sight |
| Indian Subcontinent | PP Homo Injection | Offer Given | 890-900 | TT |
| Middle East | PP Homo Injection | Offer Given | 900*-920* | LC at sight |
| Southeast Asia | PP Homo Injection | Offer Received | 1,040 | LC at sight |
| Middle East | PP Homo Raffia | Offer Given | 880-900 | LC at sight |
| Southeast Asia | PP Random Copolymer Extrusion | Offer Received | 1,150 | LC at sight |
Description: *Offers for July shipment
Tags: Asia Pacific,China,English,Monthly,NEA,PP
Published on June 30, 2020 5:06 PM (GMT+8)
Last Updated on June 30, 2020 11:29 PM (GMT+8)
