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China’s PP, PE markets unresponsive to Brexit woes

by ChemOrbis Editorial Team -
  • 29/06/2016 (04:08)
The Brexit vote rocked the markets last Friday, causing oil markets to extend losses to this week as NYMEX crude prices saw as low as $46/bbl from $49/bb. Although the energy complex pared some losses later on Tuesday, this news created some concerns in the Asian PP, PE markets as well with many players voicing their intentions to take a more cautious stance. However, players in China reported that they have not seen any immediate impact on prices so far as PP and PE prices continue to firm up both in the import and local markets.

Following the UK’s decision to exit from the EU, there are uncertainties ahead and players in Asia widely concur that demand from Europe for export opportunities will be lower in the near and medium term. Some traders in China and Southeast Asia also pointed to the further depreciation of local currencies against the US dollar upon this news. “Our cost of importing material will be higher due to the weaker Chinese Yuan,” said a trader in Shanghai.

The recent losses of the energy complex also pushed buyers in Southeast Asia to sidelines. A shopping bag manufacturer in Vietnam said, “Now that crude oil lost ground, we prefer to adopt a wait and see policy.” A trader in Vietnam also does not think that the recent upturn in PP and PE markets will be sustainable as both converters and distributors are increasingly more cautious upon the decreases of crude oil.

Nevertheless, the Chinese PP and PE markets appear to have shrugged off this news so far this week. A trader in Xiamen said, “The stock market turned bearish but it pared its losses later on. Although players continue to buy on a needs only basis, local and import PP and PE prices have still been on a firm note.”

In China’s import market, a global producer raised its PP offers by $20/ton this week while a Saudi major lifted its PE prices by $40-70/ton for July shipments.
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