China’s PP sentiment improves a bit given firmer energy costs
NYMEX crude oil futures broke above the $51/barrel threshold during day trading on February 3. Spot naphtha prices gained around $55/ton week over week to be quoted at $475/ton CFR Japan. Meanwhile, May PP futures on the Dalian Commodity Exchange closed CNY228/ton ($37/ton) higher at CNY7588/ton ($1055/ton without VAT) on February 3. On a weekly basis, PP futures prices gained CNY363/ton ($59/ton).
A distributor based in Yuyao commented, “Local PP prices retreated around CNY50-100/ton ($8-16/ton) at the start of the week, but buyers are starting to return to the market following the recent increases in oil and naphtha prices in order to build some stocks ahead of the Chinese New Year holidays.” According to him, players believe that prices are now near the bottom while demand is expected to improve in March after the holidays.
In China, local homo-PP raffia prices currently stand at CNY7600-7900/ton ex-warehouse China, cash including VAT basis ($1057-1099/ton without VAT).
In the import market, meanwhile, a source from a South Korean producer reported that they managed to sell out their PP random copolymer pipe type 3 quota to China in a very short time at $1180/ton CFR, cash. The source said, “Market sentiment seems to be picking up despite the approaching holidays. We are feeling optimistic regarding the demand outlook due to firmer energy costs as well as upcoming planned turnarounds in the April-May period.”
A trader based in Guangzhou also stated that they were able to conclude some deals for Saudi homo-PP raffia and injection at $1000-1020/ton CFR China, cash. He stated, “We concluded some PP deals in China thanks to firmer energy prices. Buyers have been holding low inventory levels for quite some time as they were maintaining their cautious stance in the face of persistently decreasing prices while the recent upward movement in crude oil prices has managed to stimulate some buying interest. However, we think that the market outlook remains unclear as we are not sure if the recent gains in energy markets will be sustainable.”
Import homo-PP raffia and injection prices in China are currently standing in the range of $950-1020/ton on a CFR, cash equivalent basis.
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