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Polymer players discuss supply outlook after G20 in China

  • 12/09/2016 (06:51)
China hosted the 11th G20 Summit on 4–5 September in the city of Hangzhou. As reported earlier, the government had required many petrochemical plants near Hangzhou to restrict their output before and during the Summit in order to ensure the city meets environment quality requirements.
Now that the Summit is over, players are closely tracking the supply outlook since several plants that were shut due to G20 are now expected to be restarted in the short term.

Players’ expectations are divided about the post-G20 market outlook as some expect supply to recover in line with the upcoming restarts while others argue that the market will not be exposed to oversupplies immediately.

In the PVC market, a source from a domestic producer noted, “PVC supplies are set to increase gradually now that the G20 Summit is over. This willould drag down prices as demand is not strong enough to support any increases ahead of the fourth quarter.” A source from a different producer added, “Many players are sidelined for the moment as they expect to see a softening on prices due to the upcoming plant restarts. We aren’t feeling positive regarding the near term outlook.”

Meanwhile, a source from a third domestic producer commented, “Our supply is still tight due to reduced operating rates. We don’t expect a sudden increase in supplies as we heard that the government will be controlling operating rates in the future to keep overcapacity in check.”

A trader active in the PP market opined, “The G20 Summit kept supplies reduced for the first half of September, however, this should not have a major impact on the market anymore as it is already priced in while there are three PP plants scheduled to start up in China in September.”

A PE seller operating in China also stated that the PE tightness is now set to ease in line with the smoother supplies from the east following the end of G20. “However, the upcoming restarts will not result in an oversupply situation. Hence, we don’t expect to see any major impact on the market,” he further added.
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