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What waits for China’s petchem markets after 19th Communist Party Congress?

  • 23/10/2017 (03:36)
In China, the 19th National Congress of the ruling Communist Party topped players’ agenda during the past week. The congress, which is traditionally held in every five years and provides an insight to the vision of the country in several fields, took place on October 18 this year while petrochemical players evaluated the possible impacts of it on the near-term outlook.

In the country’s polymers sector, the results of the congress are crucial in terms of the policy to be determined about the environmental inspections, which currently continue in China strictly. The ongoing inspections have been limiting the run rates at many plants, affecting the operations of both polymer producers and end-product manufacturers.

“Environmental inspections have been really stricter this year when compared to before. We heard that several producers in the northern part of the country were asked to reduce their operating rates. We are also running our plant at 60% of capacity. It seems that the inspections will continue in the long term following the Communist Party Congress,” a PVC producer commented.

A source from an acetylene based PVC producer noted, “Environmental inspections are limiting the operating rates in both upstream and downstream markets. We think that the inspections will be stricter after the congress.”

Apart from the environmental issues, the policies after the congress are also expected to have influence on the Dalian Commodity Exchange, which is an important determinant of the local polymers markets in China.

A polyolefins trader commented, “The futures market is quite speculative nowadays and the decisions taken after the 19th National Congress of the ruling Communist Party of China will make it more volatile. For this reason, we think PP and PE prices are more likely to see fluctuations in this period.”