Manifold Factors Lend Support To China's PP Prices, Demand Has Yet To Follow
- Local PP prices mostly gained encouragement from futures prices
- Market sentiment remains flat on the back of several reasons
- Players foresee sustainability of the current local PP prices
As SSESSMENTS.COM noted, manifold factors including firm feedstock and futures prices as well as supply conditions have united in supporting PP prices, however, demand has yet to follow. In the past few days, PP futures prices have shown an increment which was caused by the capital injection coupled with the maintenance season at several giant plants in the country during July. Following suit, a market player stated that spot prices for local PP Homo Raffia cargoes are mostly recorded with an upward movement of between CNY50-100/ton ($7-14/ton) on a weekly comparison. On Tuesday, July 7, a trader’s latest offers for PP Homopolymer grades adjusted up by CNY150/ton ($21/ton) compared to a day earlier. Likewise, the trader also raised the offers for local PP Random Copolymer by CNY100/ton ($14/ton) from last Friday’s level. On the other side, a converter reported receiving offers for PP Homo Raffia from one of the local producers at CNY100/ton ($14/ton) higher than last week’s level. To date, the converter decided to secure some volume with deals concluded at the same level as the initial offer levels.
In the import market, SSESSMENTS.COM’s data showed that the current mainstream offers mostly available at above $900/ton-level. For Middle Eastern cargoes, a trader mentioned that offers for import PP Homo Raffia remained stable from last week’s level. Similarly, another trader also received import offers for PP Homo Raffia of Saudi origin at a stable level compared two weeks ago, at $930-950/ton on LC at sight, CIF China Main Port basis. The trader thinks that such a level is too high and is uninterested in taking the cargoes even when the supplier provides room for bids.
Unlike prices, domestic demand for PP resins is unable to shine. Market sentiment remains flat as buyers are still objecting to high prices. Besides, converters are now keeping a lean inventory level and unwilling to place orders as they are anticipating for the traditional low season. For finished products, the healthy demand is mostly coming from the packaging sector. On the plant news, Zhongke Refinery and Petrochemical’s two PP units with each capacity of 550,000 tons/year reportedly are still on track to start up production within this month. Their materials are expected to be available in the market this Q3 2020. Moreover, SSESSMENTS.COM was told that China’s Shenzhen Juzhengyuan will undergo maintenance shutdown at its two PP lines with each capacity of 300,000 tons/year starting from July 10 until July 23. On the supply side, some players stated that inventory level in the local producers’ end is relatively limited at the moment.
For the outlook, the majority of Chinese market players contacted by SSESSMENTS.COM believe that the current local PP price trend will sustain as supported by the firmer propylene prices coupled with supply conditions. In terms of demand, no sign of improvement observed to date.
