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Polymer output faces cuts in China due to virus-hit consumption

by Merve Sezgün -
  • 07/02/2020 (11:41)
Market players report that some polymer producers in China have either shut their plants or reduced run-rates due to subdued trade amid the coronavirus outbreak. More producers are expected to lower production over the upcoming months in the face of the virus-hit consumption.

Oversupply of polymers after holiday

China has returned from its extended Lunar New Year holiday with an oversupply of polymers as most domestic producers continued to operate at full capacity when downstream players were away from their desks.

Traders reported that two major local producer’s overall polyolefin inventories have moved above one million tons, accumulated around 600,000 tons during the holiday.

Downstream operations yet to be resumed

In the downstream markets, on the contrary, end-product manufacturers shut their factories for the holiday and most of them are yet to resume production due to China’s lockdown on certain provinces that has kept workers from returning to work.

“Quarantine measures have affected operating rates at downstream factories which, in turn, may lead to reduced purchasing,” opined a few players.

Polymer production sees cutbacks

“Several ABS and PS producers have reduced operating rates at their plants in China while many others plan to restrict production in the weeks to come,” a trader based in Hong Kong said.

Meanwhile, some PP and PE producers have extended the duration of their maintenance shutdowns or cut operating rates to around 80%, according to market sources.

Players also commented that more plants would be shut if travel restrictions continue as transport disruptions hinder trade flows.

China Council for the Promotion of International Trade (CCPIT) announced in a statement that it would offer force majeure certificates to Chinese businesses affected by the coronavirus outbreak.
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