Nearing holiday takes shine of bullish run in China’s PP, PE and PVC markets
As of September 19, LLDPE and PP futures on the Dalian Commodity Exchange were respectively $61/ton and $67/ton lower on the week while PVC futures witnessed a relatively larger decrease of $72/ton in the same period.
The downward adjustment in the local PP and PE markets occurred despite the bullish factors in place including the tightness in the import market, maintenance shutdowns in October as well as firm propylene and ethylene prices in Asia.
A PP compounder commented, “Local prices have recently softened as they firmed up too much previously. Other factors including the retreating of futures prices, local producers’ higher supplies and weak demand also pushed prices lower. Our orders have been stable so far; however, our profit margins are very narrow as costs are quite high.”
A trader in Xiamen said, “LLDPE futures have been decreasing since September 6 while we heard that overall inventories of CNPC and Sinopec have increased to 800,000 tons, the highest level since June. Demand is yet to catch up with increases in PE prices; and therefore, the market might see some downward corrections ahead of the National Day holiday.”
A PP, PE trader in Shanghai opined, “Although the tightness in import PE supplies is likely to remain in place until mid-October, we are not certain as to whether it can be enough to push prices higher amidst retreating futures and buyers’ resistance ahead of the National Day holiday.”
As for PVC market, where players are mostly sidelined ahead of the awaited October pricing of a Taiwanese major, local PVC prices have been posting slight drops in line with the weakening demand ahead of the holiday and the losses in the futures market. “PVC prices in China have been undergoing a slight correction,” a trader noted.
Whether demand will remain subdued in October following the holidays and prices will continue to shrug off the tightness and higher costs is yet to be seen.
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