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Polyolefins track divergent paths in Asia and Europe

by ChemOrbis Editorial Team -
  • 27/06/2016 (14:45)
The polyolefins markets followed opposite directions in Asia and Europe during recent weeks. In China, PP and PE prices are on a firming trend on the back of higher futures markets as well as supply limitations while European polyolefins markets are dominated by a softer outlook amidst slow demand and comfortable supplies.

In Europe, rollovers to decreases are passing on June PP and PE deals. Prices in the region’s spot markets also witnessed week over week drops given stagnant demand. A distributor operating in Germany commented, “Demand is quite slow across the region as most buyers are refraining from securing any extra stocks at the moment due their bearish expectations for July.” Another distributor made similar comments about demand saying, “Sellers are conceding to discounts in order to boost their sales nowadays. Meanwhile, supplies are comfortable.”

In China, on the other hand, players reported that PP and PE prices have been following a higher path over the past weeks. Following the gains in the local market, import PP prices in the country started to pick up two weeks ago and PE prices followed suit. The recent upward movement is attributed to significantly higher futures prices as well as reduced availability stemming from maintenance shutdowns. A trader opined, “We replenished our stocks owing to our expectations of firmer prices in the coming days. We think that prices can increase for another ten days before they undergo a correction and then move higher again.” Another trader noted, “Supplies in the import PP and PE markets are rather limited while Chinese distributors’ and converters’ inventory levels are low. This situation is providing support to the prevailing market levels.”

However, several players in the country highlight that demand is not strong enough to support the recent increasing trend as it is still limited to players’ immediate needs. A converter reported that demand for end products remains quite weak, commenting, “Most converters are operating their factories at lower rates and some do not even have orders to operate.”

Meanwhile, global crude oil futures prices plunged right after the United Kingdom decided to leave the European Union following the Brexit referendum on June 23. Prices depreciated by more than 4% during the intraday trading on both NYMEX and Brent futures. Players operating in global polyolefins markets are now closely monitoring the developments in the upstream markets which are expected to react to weaker crude oil costs soon.
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