China’s local PP, PE markets slightly recover on lower inventories, demand pick-up
Some players reported that there were some replenishment activities prior to the mid-Autumn Festival, which is celebrated by the end of this week. Plus, the September-October season indicates the peak season for PP-PE applications, leading to expectations of seeing better demand within this period.
Local homo-PP prices and PPBC inj. offers were up by CNY100-150/ton ($14-21/ton) when compared to last week to be reported at CNY8,600-8,700/ton ($1070-1082/ton without VAT) and at CNY8,700-8,850/ton ($1082-1101/ton without VAT), all on an ex-warehouse China, cash including VAT basis.
In addition to support from the supply and demand side, crude oil futures’ firm start to September also gave an upper hand to sellers. According to ChemOrbis Price Wizard, October WTI (NYMEX) crude oil futures are nowadays standing at a six-week high.
After last week’s rally, PP and LLDPE futures on the Dalian Commodity Exchange have mostly fluctuated since early this week. During September 9-12, January LLDPE futures on the Dalian Commodity Exchange posted a total gain of CNY95/ton ($13/ton).
Local PE prices, meanwhile, posted increases within the range of CNY50-200/ton ($7-28/ton) from last week to currently stand at CNY7760-8250/ton ($965-1026/ton without VAT) for LDPE film, at CNY7230-7450/ton ($899-927/ton without VAT) for LLDPE film and at CNY7830-8150/ton ($974-1014/ton without VAT) for HDPE film, all on ex-warehouse China, cash including VAT basis.
A few traders lamented, “Strong energy complex, lower local inventories and a pick-up in demand have led to a positive sentiment this week, encouraging sellers to offer higher. We are now following up whether this slight recovery will be sustained or not.”
Meanwhile, the uncertainty driven by the trade dispute with the US, concerns over supply for H2 2019 and weaker global economy outlook push players to remain cautious for the medium-term outlook.
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