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Caution reigns China PP market amid scant demand, low import supply

by Pınar Polat -
  • 31/03/2021 (03:46)
In China, sentiment in the PP market has remained cautious for another week due to frail demand. While overseas sellers have stood firm on their offers to China amid their preference for higher-margin markets, the volatility of crude and feedstock prices have kept players vigilant.

Local PP prices slide in H2 March

In mid-March, local homo-PP raffia and inj. and PPBC inj. offers in China hit their highest levels since November 2018, weekly data obtained from ChemOrbis Price Index reveal. Since then, local prices have been on a downturn, losing around 3-5%.

PP Prices –Local – China

Local prices are now standing at CNY9100-9200/ton, ex-warehouse China, cash including VAT basis ($1239-1253/ton without VAT) for homo-PP raffia and inj. and at CNY9200-9300/ton ($1253-1266/ton without VAT) for PPBC inj. with similar terms.

As a trader put it, “Falling Dalian futures and major producers’ lower PP offers have weighed on the sentiment this week. The impact of the turnaround season is offset by new capacities coming on stream. On the cost side, crude oil futures have been on a correction period but they are still providing cost support. Buyers are mostly cautious about replenishing. We think the near-term outlook will remain stable to slightly weak.”

Meanwhile, May PP futures on the Dalian Commodity Exchange posted daily losses of CNY58/ton ($9/ton) and CNY111/ton ($17/ton) on March 29 and March 30, respectively.

Import PP prices propelled by tightness

Overseas sellers have continued to limit their allocation to China as they prefer to target higher-margin export outlets. This has been keeping the import PP markets on a stable to slightly firmer trend for the past three weeks despite the weakening in local markets.

A major Saudi producer applied monthly hikes of $100/ton on its April homo-PP raffia offers to China at $1350/ton CIF, citing their low allocation.

“Our supplier prefers to divert more cargoes to Europe, where better netbacks are available,” the agent of the major noted.

Import homo-PP raffia and inj. offers for all origins are assessed stable on the week at $1260-1300/ton CIF China, cash. The major’s latest raffia offer level was not included in the weekly price index as it was above the prevailing market levels.

Chinese PP sellers continue to target SEA aggressively

PP sellers in China have ramped up exports due to lack of strong demand at home, as well as netback opportunities offered by other outlets.

In Southeast Asia, particularly Vietnamese players have been reporting Chinese sellers’ aggressive approach to the market.

A trader said, “We are yet to receive offers for Saudi and South Korean origins. There have been only offers by Chinese traders and they are quite aggressive at $1320-1350/ton CIF, with a further discount available. ”
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