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China’s PP, PE sentiment boosted by surging futures, PVC unresponsive

by ChemOrbis Editorial Team -
  • 07/12/2016 (17:44)
In China, sentiment in both local and import polyolefin markets gained strength this week on the back of surging crude oil and futures prices. However, the sustainability of the recent firming is now a matter of dispute among market players as both PP and PE had been on soft terms since mid-November due to thin demand.

May LLDPE futures on the Dalian Commodity Exchange closed CNY245/ton ($36/ton) higher at CNY10155/ton ($1260/ton without VAT) on December 7. On a weekly comparison, futures surged by CNY890/ton ($129/ton).

Looking at PP, May futures on the Dalian Commodity Exchange closed CNY423/ton ($61/ton) higher at CNY9315/ton ($1155/ton without VAT) on Wednesday, December 7. PP futures skyrocketed by CNY1128/ton ($164/ton) from a week earlier.

A trader operating in Guangzhou attributed firming sentiment to higher crude oil prices which surged after OPEC’s decision to cut production. “Local PP and PE markets increased by around CNY200-300/ton ($29-44/ton) when compared to last week while overall ranges for import prices are stable to $20-30/ton firmer. Following the crude oil gains, PP and LLDPE futures witnessed visible increases since both CNPC and Sinopec are still reported to have low inventory levels. However, demand is still not supporting the current scene at all,” the seller commented.

An Indonesian woven bag converter stated, “We are not feeling sure whether the recent upturn in China will be sustained next week as demand is not strong enough to support firmer prices now. We already covered our needs until February; hence we are now on the sidelines of the market, only monitoring the developments.”

In China, the overall range for import PP raffia prices currently stand at $1020-1050/ton on a CIF, cash equivalent basis. For PE, import ranges are currently quoted at $1320-1360/ton for LDPE film, at $1118-1180/ton for HDPE film and at $1060-1231/ton for LLDPE film with the same terms.

Meanwhile, in the local PVC market, prices were reported to remain on a softening note this week despite the recent bullish developments both in the upstream and futures markets. The softening was led by slowing demand in line with the beginning of off-season for PVC applications as well as increasing supplies from import markets arriving at the eastern parts of China. Meanwhile, many buyers concurred that China’s local acetylene based PVC market had already reached its peak levels in the past weeks.
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