China PP surges 7-15% to about CNY14,000/t
14 May 2008 09:30 [Source: ICIS news]
SHANGHAI (ICIS news)--China polypropylene (PP) has increased 7-15% or CNY 1,000-1,900/tonne ($143-272/tonne) since April on rising crude oil and propylene prices, persistent tight supply and bullish sentiment, market players said on Wednesday.
Domestic homopolymer PP prices saw the biggest hikes of CNY 1,500-1,900/tonne, a rise of 12-15% to CNY 13,600-14,400/tonne from CNY 12,100-12,500/tonne in April.
Co-polymer PP prices were also CNY 1,000-1,450/tonne, 7-11% higher during the period.
The driving forces were high energy costs and persistent tight supply coupled with local producers lifting their offer price, the sources said.
Business slowed down when PP prices climbed above CNY14,400/tonne due to strong resistance from downstream converters as most traders began operating cautiously and tried to maintain low stocks, some traders said.
The tight PP supply situation would be alleviated as new production could emerge from two newly-built PP units including Formosa Ningbo and Qingdao Refinery in early June or July.
Since April, crude oil and propylene prices have risen $24.22/bbl or 23.8% from $101.58/bbl to $125.80/bbl and $180-190/tonne or 14-15% from $1,260-1,300/tonne to $1,450-1,480/tonne respectively.
Continuous lifting of domestic producers’ offers due to low inventory and smooth sales also boosted market prices. Homopolymer PP and copolymer PP offers were hiked 10-11% to CNY 13,400-13,650/tonne and CNY 13,900-14,200/tonne respectively.
PP supply has remained short since April due to a series of shutdowns at Luoyang Petrochemical, Wuhan Phoenix,Yangzi Petrochemical and Fushun Petrochemical among others, while most PetroChina sales branches were keeping very low inventory due to logistic restrictions imposed to ensure transport of food from northeast to south
In addition, imports dropped 29.1% in the first quarter of 2008 compared with the same period last year, leaving a supply gap.
($1 = CNY6.99)
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By: Jade Xu
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