China's PP market prone to more volatility than PE
Domestic PP raffia prices have posted a cumulative increase of around CNY1070/ton ($160/ton) in the past one month whereas local PE prices have moved up by CNY330-400/ton ($50-60/ton) on average.
This significant spike in PP has helped domestic prices gain their premium over imports recently as they traded mostly at par with imports for the large part of the past one year. Between early April and late May, domestic prices even fell well below import prices, according to ChemOrbis Price Index.
“Seeing such a sharp increase particularly for PP in such a short time, we are feeling concerned about the trend. Demand from the downstream markets is not healthy in particular,” commented a distributor in Shanghai.
When looking at the data of the past few years, ChemOrbis Price Index reveals a larger fluctuation for PP when compared to PE since early 2015. PP prices have posted a bigger decrease in the long downturn that started in early May 2015 and extended into the first month of 2016. In the following up and down cycles of the trend, PP prices have been prone to larger volatility with respect to PE, as can be seen from the graph prepared by ChemOrbis Price Wizard that compares China’s domestic PP prices with PE.
The reason behind this situation can be attributed to the new capacities coming online steadily in China for PP plants since early last year. As there is more supply to deal with and demand remains steady, PP prices tend to see more fluctuations.
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