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China's post-holiday outlook offers a mixed bag

  • 08/02/2018 (11:49)
In China, overall market activity has been quite limited so far this week given the Chinese New Year holiday, which is to start by the middle of next week. Before leaving their desks, players in the country’s polymer markets are voicing mixed expectations regarding the post-holiday outlook in the midst of some divergent factors.

According to several players, prices for most polymer products are likely to maintain their current firm trends after the holiday since end-users are expected to return to the market to replenish their stocks. Low supply levels for several products including PE, PP, PVC and PET are also believed to help the market sustain its bullish sentiment in the post-holiday period.

“Major producers in the Middle East are planning to shut their PE plants for maintenance in the February-March period, which will give them an upper hand in price negotiations for March,” a few traders in China opined. Although the country’s local PE market has softened recently, import prices are set to enter the holiday on a bullish note on the back of the ongoing tightness, particularly for HDPE.

A PP trader in Ningbo commented, “Both traders and converters will mostly enter the holiday with low stocks as they have delayed their purchases to late February given the uncertain outlook. Despite the lack of demand in the pre-holiday week, local PP prices remain firm amidst major local producers’ low supply levels. We don’t expect to see a downturn in prices after we return from the holiday.”

In the PS and PET markets, a few domestic producers mainly said, “Prices continue to follow a stable to firm trend due to higher upstream costs as well as local suppliers’ low stock levels. We think that prices will start the post-holiday period on a firm note since the high season will begin in around March.”

Meanwhile, in the PVC market, a major Taiwanese producer announced its March offers to China and India with a visible hike of $60/ton from February. A Chinese PVC producer commented, “Although local demand is not great given the upcoming holiday, the market sentiment remains strong amidst the globally firm trend and limited supplies inside China. The post-holiday outlook seems to be bullish when considering these factors.”

On the other side of the coin, some polyolefin players noted that China’s polymer markets may not have room for additional hikes after the holiday since local supplies will improve in the upcoming two weeks when buyers are away from their desks.

A trader based in Beijing opined, “Major domestic producers’ PE and PP supplies will increase during the Chinese New Year holiday, which might offset the ongoing tightness from the overseas markets. Prices are already quite high, particularly for HDPE products. Hence we may not see major changes in prices when we return from the holiday.”
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