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Chinese PP, PE sellers discuss post-holiday outlook

by ChemOrbis Editorial Team - content@chemorbis.com
  • 10/10/2016 (09:16)
As the seven-day National Day holidays ended on October 9, Chinese players started to return to their desks this week in the midst of a strong crude oil outlook coupled with higher futures markets. In the country’s local PP and PE markets, players’ initial comments suggest that a revival in post-holiday demand from buyers supports a firm outlook, which is more visible for PE.

On the Dalian Commodity Exchange, January LLDPE futures closed CNY405/ton ($61/ton) higher on Monday while January PP futures settled with an increase of CNY279/ton ($42/ton).

Several China-based sellers reported that the major local producers CNPC and Sinopec opened the post-holiday period with higher offers on the back of good demand coupled with their reduced inventories.

A source from a global producer reported that they have been receiving a good number of inquiries from buyers in China for the last couple of days. “Demand is likely to help sentiment firm for both PE and PP while we expect prices to track a mostly steady trend. PE seems to be stronger than PP given ongoing supply concerns in the LDPE market,” the source commented.

A trader stated, “Both PE and PP prices opened the post-holiday period with increases. We are receiving many calls from buyers at the moment. In the local market, LDPE and HDPE film prices are already up by around CNY300/ton ($45/ton) when compared to pre-holiday levels. For PP, we think that the recent gains will prove unworkable in the days ahead. A mostly soft trend is expected in the PP market for the last quarter.”

A second trader operating in China affirmed improving demand for both PP and PE following the end of the holidays. He said, “Despite a firm start, we think that the PP market is not strong enough to absorb additional gains in the face of ample supplies.”

A Shanghai-based seller opined, “Local LDPE film offers registered increases right after the holidays due to the ongoing tightness in the market. LLDPE film prices are mostly stable for now. Demand is better on the back of improving sentiment which attracts buyers to the market for replenishment.”

A trader operating in Hong Kong stated that demand from converters is yet to revive while traders are sourcing materials in anticipation of seeing firmer levels in the days ahead. He reported, “Major domestic producers already raised their offers for PP and PE. LDPE sees the strongest demand among other PE products and PP due to its tight availability. Following the end of the National Day holidays, local prices increased by around CNY200-300/ton ($30-45/ton) for LDPE film and by CNY150/ton ($22/ton) for LLDPE and homo-PP.”

Another trader in Shenzhen commented that he was already expecting to see firmer PE levels after the holidays, yet he was surprised with PP increases. “Local PE prices are firming on the back of limited LDPE supplies which also supports sentiment for other PE grades although demand for LLDPE and HDPE is not that great. Meanwhile, the import market is stable for now. For PP, we were expecting to see lower prices following the holidays given comfortable supplies and frail demand. However, we see that traders are holding onto their future materials in order to improve end users’ buying appetite.”
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