China’s local PP market retreats from 2-month high
“Overseas sellers are not interested in selling PP to China where prices are quite low compared to other countries. Demand inside the country has been scant recently due to sharply lower futures,” explained players.
Data from ChemOrbis Price Index reveal that the weekly averages of local homo-PP raffia and PPBC injection prices have retreated from their 2-month high. When compared to last week, local prices have seen decreases ranging from CNY100/ton ($15/ton) to CNY300/ton ($46/ton).
Import homo-PP raffia and injection prices for all origins were unchanged for another week at $1090-1140/ton CIF China, cash.
Falling futures weigh on buying appetite
September PP futures on the Dalian Commodity Exchange registered a combined decrease of CNY331/ton ($51/ton) on Monday and Tuesday.
“PP futures moved lower at the beginning of the week and spot offers followed suit. Prices are not witnessing larger decreases due to a number of maintenance shutdowns inside the country. However, the upcoming capacity additions weigh on the outlook,” a few traders commented.
A PP converter added, “Most buyers replenished their stocks in the previous weeks. With the futures market moving lower, the buying appetite has disappeared this week.”
Local polyolefin inventories rise
According to players, the two major producers’ combined polyolefin supplies were reported at 705,000 tons on July 28. The level indicated a week over week increase of 35,000 tons.
“PP turnarounds have failed to prop up local prices this week since buyers have retreated from the market after seeing futures going down,” a trader said.
Demand outlook mixed
Players were divided as to the likely direction of the market for the upcoming term since the demand outlook remained unclear.
On one hand, sellers expect buying interest to revive next month ahead of China’s “Golden September, Silver October” peak season. They believe that strong crude oil futures and high propylene prices will also support sentiment.
On the other hand, China is slated to welcome a huge PP capacity addition this year, which is likely to weigh on demand amid considerably higher supply levels.
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