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China’s local PP and PE markets turn soft again

  • 18/04/2017 (08:54)
In China, local PP and PE markets have turned soft again after a short-lived recovery of 2-3 weeks. This was due to the fact that several bearish factors including softer futures, higher stock levels and weak demand gained prominence to set the tone of the market despite the recovery in the energy complex and planned shutdown at several plants across the region.

A trader commented that the futures on Dalian Commodity Exchange are still on a downward trend, which is pressuring the PP and PE prices amidst disappointing demand and higher inventory levels on the local producers’ side.

A second trader also confirmed that there is no supply shortage in China and bonded warehouses are full of material. “Local PP and PE maintenances do not seem to lend a support to the markets. We think that markets’ April trend will be weak before prices slightly rebound in May due to the peak season for packaging consumption in line with warmer weather in June and July,” added the trader.

A producer said that China’s local LLDPE and PP offers declined by CNY200-300/ton ($29-44/ton) over the past week, mainly given the softening futures while they prefer to sell Vietnam instead of China in an expectation of achieving better netbacks. However, he admitted that buying appetite is not satisfactory there either.

On the buyers’ side, a manufacturer said that they are not interested in buying PE and they source PP only to meet their needs as he expects no major improvement in their final products in the April-May period.

Meanwhile, a different trader agreed that demand remains weak with buyers sourcing on a need only basis and they expect that prices will continue to follow a softer trend over the near term; however, the trader also pointed out that reduced import PE cargoes from overseas markets and maintenance season may help alleviate the pressure in the market.
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