China PP, PE players see bleak demand scenario
Demand mirrors weak downstream sectors
Weak national and global economics continue to weigh on downstream industries, with manufacturing activity seeing a constant slowdown. In addition, retreating prices of finished goods have cut into converters’ profitability, limiting their purchase enthusiasm.
A converter reported, “Demand has been sluggish as downstream run rates have entered a downturn. Across the key consuming sectors of construction as well as automotive and electronics, manufacturing activities have declined.” Buyers mostly prefer to stay on the sidelines or replenish limited quantities for basic needs.
Limited improvement on cautious approach
The road to a demand recovery is a tough one in the wake of a cautious trading atmosphere, which has hindered off-take volumes. A Zhejiang-based trader reported, “End users are approaching with caution as a result of bearish sentiment in the market lately and a gloomy outlook. Even though end-user demand has increased, overall volume is still smaller on a yearly basis.”
Concentrated digestion of raw materials is said to be difficult to achieve, despite the fact that demand is still there, particularly for PE thanks to an e-commerce festival, with downstream factories continuing to make the essential purchases. There is also some support for daily chemical packaging given increasing downstream buying interest, but the cautious trading environment limits the packaging market’s growth, according to players.
In addition, the Israel-Hamas conflict contributes to the current economic uncertainties, preventing demand improvement. “The situation is complicated on the back of the conflict in the Gaza Strip and economic turmoil, which has dampened demand from downstream buyers,” said another trader.
Players divided on impact of year-end holidays
In the meantime, market participants differ in the impact of the year-end holidays, consisting of Christmas and Thanksgiving, on actual demand for polyolefins. Upbeat players expect the holidays to slightly push downstream orders up, resulting in higher demand for raw materials, whereas others voice an opposite point of view and keep a cautious demand outlook.
An agent of a major Saudi Arabian producer reported higher buying power in preparation for the holidays, saying, “There is some replenishment from our customers in preparation for the year-end festivals, with improvements seen only in domestic orders while export orders remain challenging.”
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