China PP/PE imports fall in July on high prices

29 August 2006 07:26  [Source: ICIS news]

SINGAPORE (ICIS news)--China’s polyethylene (PE) and polypropylene (PP) imports in July fell by up to 32% compared with the same month a year ago as recent price surges had sidelined buyers, market sources said on Tuesday.

PE imports fell 22% in July to 412,664 tonnes compared with the same month a year ago, according to statistics from the China Customs. China imported 27% less PP at 221,794 tonnes in July.

Linear low-density PE (lldPE) imports recorded the sharpest decline of 32% to 111,983 tonnes, while high-density PE (hdPE) and ldPE imports fell 17% and 20% to 213,228 tonnes and 87,453 tonnes respectively.

Recent price hikes hit lldPE imports hardest as the material is mostly used by processors who sell their finished products in the local market, traders said.

Unlike other converters who produce for exports and are exempted from import duties, these processors have to pay the duties and hence are more resistant to polymer price hikes, they added.

Also, lldPE demand in the agricultural film sector was weak as the mulch film season ended in late April, traders said.

Greenhouse film production, another key lldPE application in China, is expected to peak in August and September, but importers have delayed stocking up lldPE for this season as they could not afford current prices, they added.

ICIS news previously reported that agricultural film processors in north China had cut operating rates to 10-30% as they failed to pass on raw material costs.

Middle East and Asian producers who export to China regularly said they were not surprised by the fall in Chinese imports as transaction volumes shrank over the past months due to lower downstream operating rates.

The smaller volumes have not stopped producers from raising their prices further due to tight supply and high olefins feedstock costs, one Middle East producer said.

“Our customers in China are operating at a loss but we have to raise our prices because we have to follow the market trend,” he said.

By: Chow Bee Lin
+65 6780 4359

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