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Local PP, PE prices move up today in China

by ChemOrbis Editorial Team - content@chemorbis.com
  • 22/12/2014 (15:22)
Market players in China reported today that local price levels moved higher for both PP and PE. This upward movement was attributed mainly to higher futures prices seen recently and a small up-tick in purchases. However, most players felt that the increases represent a temporary trend, which is the result of some speculation along with slightly better demand, but that it is not sustainable due to the overall state of the energy markets. Plus, some players felt that traders and distributors are holding back on material because they purchased cargoes at higher prices and prefer to hold them for now hoping for higher prices.

PP and PE prices are reported to have moved higher by CNY200-400/ton ($32-65/ton). Homo-PP is reported at CNY9400-9700/ton ($1311-1353/ton) ex-warehouse China, cash basis as of the first day of the week. LDPE film is at CNY9900-10000/ton ($1381-1365/ton), LLDPE film at CNY9700-10100/ton ($1353-1408/ton) and HDPE film at CNY10400-10500/ton ($1450-1464/ton).

A trader commented, “Local prices have increased by as much as CNY400/ton compared to last week because of firmer futures prices. Currently supply appears limited because some sellers who are holding higher priced cargoes are trying to hold onto their inventories, plus there has been some real drawdown on local stocks because of recent purchases which may allow domestic producers to maintain prices this week. However, we feel this rebound is temporary and the long term trend is still calling for softening.”

Another trader commented that demand has picked up a bit this week saying, “We managed to conclude a few more deals at a higher price level. We heard local inventories have come down, but we still expect softening in Q1 and Q2 of next year because buyers are only purchasing a bit more due to the change in prices, but they are not maintaining high stocks.”

A third trader pointed out that there is a disconnect between higher local prices and the crude oil price trend. He stated, “The market is full of speculation right now and the local price trend is not in line with crude prices. We think crude oil prices will need to remain at a lower level for a longer time period to fulfill the goals of OPEC’s last production decision. For now demand seems to be better, but we are not sure whether the firming trend can be sustained. Despite the higher futures prices, as long as upstream costs are weak, polymer prices cannot firm up much.”
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