Sources: Rebound In Crude Oil Prices Failed To Revive Buyers’ Sentiment
- Downstream factories cut output as export sputter
- Demand remains on a slippery slope
- Local offers shift due to supply factor, SM price movement
Market sources voiced out to SSESSMENTS.COM that rebound in crude oil prices failed to revive buyers’ sentiment. This week, local SM prices have increased significantly between CNY300-400/ton ($42-56/ton) on a week-on-week basis as oil prices extended their recent recovery, lifted by optimism on a recovery in fuel consumption as some businesses slowly reopen. In response to the rebound in SM prices and limited supply in the market, most local producers applied a price increase of between CNY200-300/ton ($28-42/ton) for GPPS Injection and HIPS Injection cargoes from a week earlier. However, most converters gave a cold shoulder toward the offers due to poor downstream demand amid the pandemic crisis. In the import market, a Vietnamese producer has finalized a deal for GPPS Injection cargoes to regular customers at $800/ton on LC at sight, CIF China Main Port basis, or $40/ton lower than the initial offer level.
China’s PS market was bustling with activity in the past couple of weeks as most buyers were building inventory ahead of the Labor Day holiday. However, market activity started to turn tepid this week as the majority of converters prefer to adopt a wait-and-see position and to purchase on a need basis. The uptrend in crude oil prices is unable to boost buying sentiment due to sour downstream demand. On the production front, most downstream factories are looking at further reducing output in the wake of a sharp demand downturn amid the Coronavirus pandemic. At the moment, most companies are running at an average of 60% from the normal capacity due to falling export orders. Even though most countries are taking a gradual approach to lifting restrictions, manufacturers still scramble to increase sales to the export market as Coronavirus spells disaster for the global economy. As of May 8, SSESSMENTS.COM noted that SM inventory in coastal China accumulated to 277,600 tons, an increase of 2,100 tons from last week. On the traders’ end, the inventory stood at 182,600 tons, lower by 1,900 tons as compared to the same period.
For the outlook, the majority of Chinese market players contacted by SSESSMENTS.COM expect China's PS prices to remain firm in the days to come, backed by tight availability of spot domestic cargoes.
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