China’s seasonal demand sparks opposite views among PP, PE players; SEA outlook still bleak

China’s PP and PE prices moved in different directions during the first week of September given opposite factors, including slightly improved supply-demand fundamentals and sharply reduced crude and futures values. In the meantime, polyolefin markets in Southeast Asia largely stayed rangebound, shrugging off the oil freefall and sluggish demand.

Looking at demand, there were different voices in China, with players being divided in their opinions about seasonal demand recovery. Southeast Asian players, meanwhile, continued to see a lack of buying interest for both PP and PE, contributing to their subdued outlook for the short-term.

Chinese players differ in state of demand

Some highlight continuous demand recovery

In China, demand for PP and PE has experienced an incremental revival thanks to the onset of the “Golden September – Silver October” peak season. According to players, there has been strong demand from the agricultural sector, while some packaging applications and the automotive industry remain robust. “The traditional high season lures buyers into the market. More and more buyers are actively asking for offers, and purchase enthusiasm is healthy,” said a Xiamen-based trader.

Contributing to this seasonal boost have been the upcoming holidays and a stronger yuan. The Mid-Autumn Festival in mid-September and the National Day holiday in early October are expected to increase buying power, as requirements for food packaging are expected to improve, and buyers normally make pre-holiday preparation. Additionally, the appreciation of the yuan against the US dollar has favored import demand to a certain extent.

A major PE trader noted, “The traditional high season is supportive in terms of better buying enthusiasm, and the Mid-Autumn Festival holiday is likely to result in higher demand for certain food packaging films. Order entries have room to increase gradually, leading to expectations of rising production.” A producer’s source opined, “The demand outlook for September is relatively positive considering the pre-holiday purchases ahead of the National Day holiday.”

Others see limited improvement

On the flip side, some players pointed to small replenishments of a part of downstream buyers, saying the current demand revival has fallen short of expectations. “Demand has gradually increased, but the improvement is not significant. Buyers prefer essential purchases despite the peak season,” a packaging manufacturer said.

Some of them still lamented sluggish demand and anticipated no significant increase in seasonal activity. Another trader commented, “The markets remain quiet. We have yet to see any meaningful pickup in demand, even though the peak season for PP and PE applications kicks in.”

Poor demand dampens outlook in SEA

In Southeast Asia, a tug of war between sellers and buyers continues. While sellers have tried to maintain margins through rollovers, most buyers have remained on the sidelines or only made basic purchases.

Slow economic growth and underperforming downstream sectors have clouded sentiment, leading to subdued buying enthusiasm. “Demand for our end-products has stayed weak. It’s challenging for prices to rise in the current market, as downstream demand remains too weak,” said a Vietnamese converter.

The lingering weakness in demand, accompanied by the bearish trend of crude oil, has further dimmed confidence among players, with most of them seeing additional decreases in the interim. A Malaysian trader noted that while prices moved sideways, they expected them to potentially fall further. He commented, “Demand remains weak, and crude oil prices have dropped further. For now, we think it’s better to buy less or buy locally.”