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China import PP prices see corrections after sharp hikes; PE retains strength

by Merve Sezgün -
  • 03/12/2020 (04:03)
In China, lower PP futures have led to slight price corrections in the physical market this week, while the PE uptrend has remained intact amid limited supplies both for domestic and imported materials.

“After last week’s sharp gains, PP prices are now seeing healthy corrections. Domestic PE sentiment has also been affected by falling futures, yet suppliers of import PE have continued to stand firm on their offers so far,” players explained.

Import PP raffia slightly retreats from 18-month high

The weekly average of import homo-PP raffia prices on CIF China basis reached an 18-month high last week. Spot prices rose 6% last week alone as the uptrend gained momentum after a Saudi major announced its December offers to the country with a $130/ton hike.

Following those sharp gains, prices witnessed slight reductions of around $10/ton this week to be reported at $1050-1110/ton CIF China, cash for overall origins. Within that range, Middle Eastern raffia offers also dropped slightly to $1060-1100/ton on similar terms.

“PP buyers showed resistance to visibly higher offer levels last week, while they have retreated to the sidelines due to falling futures since Monday. Spot prices are seeing healthy corrections,” players explained.

Low inventories and high freights limiting room for further drops

The above-mentioned price corrections did not come as a surprise for most players, given the combination of buyers’ resistance and lower futures.

Several traders, however, commented, “Domestic inventory levels are low and import availability is still limited amid surging freight costs. Hence PP prices may not see sharp declines in the near term.”

The two major Chinese producers’ overall polyolefin stock levels were reported at 615,000 tons on December 1. According to players, that level indicated that major producers were still feeling free from any stock pressure.

In the meantime, a few traders said, “Demand towards BOPP and PPBC is still healthy in China, which could also prevent further price reductions for the near term.”

Tight import supplies continue to support PE

Import PE prices continued to rise this week and reached new high levels. Although lower futures reportedly affected sentiment in the local market, overseas suppliers stood firm on their offers to China due to tight supplies coupled with high freight costs.

According to data from ChemOrbis Price Index, the weekly averages of LLDPE and HDPE film prices on CIF China basis are currently standing at their highest levels since May-July 2019. LDPE, meanwhile, has seen its highest levels since May 2015.

For Middle Eastern origins, prices are currently quoted at $1400-1450/ton for LDPE film and at $1010-1050/ton for both LLDPE and HDPE film, all on CIF China, cash basis.

A major Saudi producer announced December PE offers to China last week with increases of $200/ton for LDPE film, $100/ton for LLDPE and $80/ton for HDPE film.
Following the major’s announcement, Middle Eastern LDPE film offers below $1400/ton CIF threshold largely disappeared from the market.
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