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Import PPH prices near $1100 threshold in China, locals slightly rebound

by Pınar Polat - ppolat@chemorbis.com
  • 09/12/2021 (03:01)
In China, import homo-PP raffia and injection prices have maintained the downtrend that kicked off in mid-October so far this week, with the current levels nearing the $1100/ton CIF threshold. Weaker demand, lower feedstock propylene prices, and oversupply concerns amid new capacities at home have been cited as the factors behind lower prices.

Local prices, on the other hand, have displayed a slight recovery due to the early-week gains in Dalian futures after remaining on the soft side for seven steady weeks.

PPH – Imports – Locals – China

Demand concerns linger despite Dalian-driven recovery in local prices

January PP futures on the Dalian Commodity Exchange settled higher in the December 6-7 sessions and posted a cumulative gain of CNY265/ton ($42/ton). They were supported by rising oil prices. On December 8, meanwhile, PP futures posted a daily loss of CNY86/ton ($14/ton).

A few traders said, “The recent increases in futures prices driven by the strong rebound in energy values have supported the sentiment in the PP market to some extent. Major producers have renewed confidence accordingly, lifting their offers to the local market after several weeks. However, demand remains limited with buyers showing resistance to the high-end of the price levels. The year-end is approaching and the latest Omicron virus variant is still a factor to consider amid possible future lockdowns across China and the region, although it appears to be less dangerous than the Delta variant. ”

On a side note, the sustainability of this recent upturn is under discussion as it was driven by the movements of Dalian futures rather than the supply-demand fundamentals.

Local homo-PP raffia and injection prices have been assessed CNY50-100/ton ($8-16/ton) higher from last week to currently stand at CNY8300-8500/ton ($1150-1178/ton without VAT) on an ex-warehouse China, cash including VAT basis.

ChemOrbis Price Wizard shows that local PP prices have regained their premium over imports after trading below them for two weeks, meanwhile.

Import prices remain under downward pressure

Unlike local prices, import homo-PP raffia and injection prices have posted additional decreases with pressure from sluggish demand and lower propylene prices.

The overall range for import homo-PP raffia and injection prices has been assessed $10-20/ton lower from last week to currently stand at $1120-1150/ton CIF China, cash basis.

China’s greater PP self-sufficiency on table amid capacity additions

Production News Pro shows that the total new PP capacities set for the final quarter of 2021 in China are slightly above 2.2 million tons, with 1.2 million tons expected to come online in December.

Capacity additions in early-2022 are likely to exert even more pressure on PP markets. In the January-April period next year, the country is expected to house around 1.6 million tons of more new PP capacity.

China’s greater self-sufficiency in terms of PP production will ease the country’s dependency on imports and push suppliers to ramp up their exports.
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