China's PP market at almost 2-year low; H2 outlook bearish
by Pınar Polat - ppolat@chemorbis.com
ChemOrbis Price Index reveals that import and local PP prices in China have recently hit their lowest levels since July 2017 following the latest round of decreases driven by persistently disappointing demand.
As the market is about to end the first half of the year on a bearish note, players are hardly optimistic about the H2 outlook, pointing to the ongoing abundance in local polyolefin supplies, the upcoming PP start-ups and escalating concerns over the US-China trade war.
Import raffia offers near $1000 threshold
As can be seen in the graph below created by ChemOrbis Price Wizard, the country’s local homo-PP market has been on a downward trend since around mid April while import prices have followed suit for the past six weeks.
The weekly average of homo-PP raffia prices on CFR China basis has posted a cumulative reduction of almost $100/ton since the downtrend kicked off, with the low end of the price range approaching the $1000/ton threshold.
New PP capacities reinforce supply concerns
Local polyolefin supplies in China have been ample ever since the end of the Chinese New Year holiday in February. Concerns over supply have grown recently due to the new capacities that are planned to come on stream in China in the second half of the year.
An additional capacity of around 5 million tons/year will be added to the China’s total PP capacity if H2 start-ups can be completed as expected.
Unpromising demand amid trade tensions, weaker yuan
The prolonged trade tensions with the US and the weaker yuan against the US dollar have kept Chinese buyers on the sidelines, casting a shadow over the demand outlook.
A trader noted, “During the first half of the year, local polyolefin supplies in China have remained long. Now that the new start-ups are on the agenda, it seems like oversupply woes will occupy the market. We also don’t expect to see a revival on the demand side until September.”
As the market is about to end the first half of the year on a bearish note, players are hardly optimistic about the H2 outlook, pointing to the ongoing abundance in local polyolefin supplies, the upcoming PP start-ups and escalating concerns over the US-China trade war.
Import raffia offers near $1000 threshold
As can be seen in the graph below created by ChemOrbis Price Wizard, the country’s local homo-PP market has been on a downward trend since around mid April while import prices have followed suit for the past six weeks.
The weekly average of homo-PP raffia prices on CFR China basis has posted a cumulative reduction of almost $100/ton since the downtrend kicked off, with the low end of the price range approaching the $1000/ton threshold.
New PP capacities reinforce supply concerns
Local polyolefin supplies in China have been ample ever since the end of the Chinese New Year holiday in February. Concerns over supply have grown recently due to the new capacities that are planned to come on stream in China in the second half of the year.
An additional capacity of around 5 million tons/year will be added to the China’s total PP capacity if H2 start-ups can be completed as expected.
Unpromising demand amid trade tensions, weaker yuan
The prolonged trade tensions with the US and the weaker yuan against the US dollar have kept Chinese buyers on the sidelines, casting a shadow over the demand outlook.
A trader noted, “During the first half of the year, local polyolefin supplies in China have remained long. Now that the new start-ups are on the agenda, it seems like oversupply woes will occupy the market. We also don’t expect to see a revival on the demand side until September.”
More free plastics news
Plastic resin (PP, LDPE, LLDPE ,HDPE, PVC, GPS; HIPS, PET, ABS) prices, polymer market trends, and more...- Indian PVC players expect bullish trend to taper off for August
- Local PP, PE offers for July track global uptrend in Saudi Arabia
- Initial ABS prices for July see larger increases than PS in Europe
- Supply constraints spark stronger PE trend than PP in global markets
- ABS, PS uptrend falters in China after H1 2020 ends at multi-month highs
- Stats: China’s total PP imports spike in May; Vietnam and India’s rising shares shine out
- Tight supply drives HDPE, LLDPE gains in Southeast Asia
- European PE markets set for 2nd bullish month on rising costs
- Turkey’s PP and PE markets propelled to a firm start to H2 despite vulnerable conditions
- Asian PVC sees V-shaped recovery in Q2, what will Q3 bring?
