China’s import PP markets climb to 6-month highs prior to Lunar New Year
On the demand side, on the other hand, things were not as brilliant. China’s major shift in strict zero-Covid policy in December has been followed by new outbreaks. Although PP has the edge over other polymers at some point with the fibre grade being used in the manufacturing of surgical masks, the overall demand has still been hindered by the Covid battle. The market activity has slowed further down recently as the holiday season has already started due to the Lunar New Year which falls to January 24, 2023.
CIF PPH prices up around 7% in six weeks
According to the weekly average data obtained by ChemOrbis Price Index, homo-PP raffia&injection prices have gained 7.3% to stand at $945/ton CIF since the uptrend kicked off last month. CIF PPBC injection prices have also increased 6% on average to $965/ton CIF within the same period.
"Import PP offers are firming up amid the appreciation of yuan against the USD, as well as limited tight supply. There have been some players replenishing materials since the beginning of last week. However, most of them are not willing to buy or are only interested in dealing at lower prices on a limited basis. There is also low supply pressure at home, which underpins the overall sentiment along with stronger Dalian futures prices,” a trader commented.
Local supply levels below 500,000 tons as of Wednesday
According to market sources, China’s two major domestic producers’ combined PE and PP inventories were standing at 480,000 tons as of Wednesday, January 18.
Operating rates have remained low at several plants in order to cope with high production costs and slow demand. Adding to this was the suppliers’ aggressive stance in clearing their inventory level as they anticipate it will accumulate during the long holidays.
Eyes already on post-holiday outlook?
PP prices are expected to maintain their stable to firmer trend in the week after the holidays so long as overseas supply remains low and the support from the Dalian futures prices continues. The possibility of a revival in demand may also contribute to these expectations if the country heads for relief after the latest spike in new Covid cases amid the abandonment of the zero-case policy.
The government’s moves to support the property sector have also generated some positivity recently. As a trader put it, “It looks like import price will move up in the upcoming days. There is sign of money flowing into the PP market and we are hoping that there will be a boost from the government’s latest policy about the property sector as well.”
According to the press, China will work to make home prices stable and strictly curb speculation after the government’s several moves to support the crisis-hit sector.
However, an expected accumulation of local supply during the holidays and the expected PP start-ups in the first quarter which totals more than 4.5 million tons/year remain bearish factors, which are likely to put pressure on the sentiment.
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