China’s local PP, PE markets propelled by rising futures, lower inventory levels
Dalian futures follow oil prices higher
Bullish energy values have led to consecutive gains in the Dalian Commodity Exchange, with September PP and LLDPE futures rising CNY138/ton ($21/ton) and CNY195/ton ($30/ton) on the week as of June 23, respectively.
A few traders said, “Rising crude oil prices and Dalian futures have helped sentiment for PP and PE recover recently. Although buyers are still cautious due to lingering concerns over Covid in Asia, buying inquiries have improved recently as the off-season is about to end. However, expectations of higher supply amid new PE and PP plants in China have continued to put pressure on the market for the longer term.”
Reflecting the domestic consumption, two major Chinese producers’ overall polyolefins stocks were reported to have decreased 80,000 tons on the week to 670,000 tons on June 23, according to market sources.
Local prices slightly rebound after weeks of declines
PE prices have been assessed flat to CNY150/ton ($28/ton) higher at CNY9300-9700/ton ($1280-1341/ton without VAT) for LDPE film, at CNY7850-8200/ton ($1079-1128/ton without VAT) for LLDPE film and CNY7900-8300/ton ($1090-1142/ton without VAT) for HDPE film, all on ex-warehouse China, cash including VAT basis.
As for PP, homo-PP raffia and PPBC inj. prices have been assessed flat to CNY200/ton ($30/ton) higher on the week to be currently standing at CNY8350-8600/ton ($1153-1187/ton without VAT) and CNY8700-8800/ton ($1201-1215/ton without VAT) on an ex-warehouse China, cash including VAT basis, respectively.
Olefins under pressure from ample supply; but a price floor might be near
Meanwhile, feedstock ethylene and propylene prices have continued to defy strong energy markets.
Spot prices have extended their losses into the sixth week due to lengthening supply and demand concerns.
However, some traders noted, “If PP and PE prices manage to flatten out over the next few weeks, there may be a chance that ethylene and propylene prices may cease their downslide, too.”
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