According to sources contacted by SSESSMENTS.COM, market participants in China are anticipating a recovery in demand as COVID-19 lockdowns ease worldwide. On post-Labour day holiday, China’s PE and PP market made a positive comeback with local and import prices reportedly moving higher compared to before the holiday. In the local market, offers for PE increased between CNY100-200/ton ($14.1-28.2/ton) while PP by CNY100/ton ($14.1/ton). Similarly, PE offers from the import market also edged higher between $10-30/ton while PP as much as $40/ton from a week ago. A global trading house sold Saudi HDPE Film cargoes at $30/ton higher than the previous week, while offer received for PP Homo Raffia of the same origin are up between $30-40/ton during the same period comparison. At the time of writing, a local trader in China informed that PE prices continue to go up on Thursday. Offers for South Korean HDPE Yarn raised by $20/ton while Thai LLDPE Film C4 by $10/ton, all compared to a day earlier. ''Today our customers are asking for additional Taiwanese HDPE Film allocations based on the deal price earlier this week at $730/ton on LC 90 days, CIF term. However, the new offer now is at $750/ton and supplier is firm on the new level.''
Market participants in China told SSESSMENTS.COM the increases found support from firmer futures market and crude oil prices. On Tuesday (May 5), U.S. benchmark crude prices posted a fifth straight gain, doubled from its April 21 lows on the back of the slowdown of supply glut and improvement in oil demand as some U.S states and several countries in Europe, Asia, Africa and elsewhere are gradually easing the lockdown. Oil prices are further supported by a rebound in China’s crude imports, climbing to 10.42 million barrels per day (bpd) in April from 9.68 million bpd in March. However, optimism in the crude market is capped by mismatch supply and demand as the coronavirus pandemic crushes global demand.
One of the local PP producers in China contacted by SSESSMENTS.COM said, ‘’Over the Labour day holiday, WTI oil price increased significantly and responding to that, futures price also surged. As such, we have decided to raise PP offers. Market confidence seems to be better and we have successfully concluded deals at the initial offer levels. We are anticipating a recovery as lockdown in other countries started to be lifted or relaxed, more and more regions are resuming businesses which will stimulate the consumption of end products, therefore downstream digestion rate should be improving gradually.’’
Despite the upswing in local and import polyolefins prices, some sellers highlighted that procurement pattern remains on as-needed-basis only and likely to continue as such in the near term. Sellers also reported that nearing the weekend, the market is not so active, hence transactions remain minimal. From buyers end, feedbacks include prices are too high, waiting for a clearer market direction as unsure whether the uptrend will sustain, as well as the gap between PE and ethylene is still wide, therefore there is room for decreases. A South Korean PP producer revealed to SSESSMENTS.COM, ‘’Even though we managed to conclude some deals for PP Block Copolymer between $850-860/ton on LC at sight, CIF China main ports basis, but the monthly sales target has not been achieved yet. Looking at the digestion rate in the local market, sales volume for Sinopec and CNPC was only 15,000 tons despite local prices increased by CNY200/ton ($28.2/ton) on Wednesday (May 6). This shows that demand is still sluggish and converters remain on the sidelines. We believe the situation will not change much in the near future.’’
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