FocusChina PP imports surge $60-70/t on supply

05 June 2008 05:31  [Source: ICIS news]

By Chow Bee Lin

SINGAPORE (ICIS news)--China’s polypropylene (PP) import prices continue to surge and have risen $60-70/tonne this week on tight supply and soaring domestic prices, Asian traders and producers said on Thursday.

Several buyers had little choice but to accept offers of yarn grade at $1,820-1,830/tonne CFR (cost and freight) China for June shipment, $60-70/tonne or 4% above last week’s transactions, Chinese traders said.

Homopolymer grade PP had also risen by $70/tonne, or 4%, to $1,750-1,770/tonne in the week ended 30 May, according to global chemical market intelligence service ICIS pricing.

Demand for yarn grade PP increased markedly in the aftermath of the Sichuan earthquake, as it was being used to make tents to provide temporary accommodation to quake victims, Chinese traders said.

Chinese major producer Sinopec’s decision to cut petrochemical output in June coupled with the unexpected outage of Maoming Petrochemical’s plants this week added to the upward price pressure, the traders said.

"The China market has gone crazy," one Asian producers said, adding that the rapid and steep price hikes have spurred strong buying interest from traders and end-users seeking to stock up in anticipation of further price increases.

Many Chinese traders and producers in Asia and the Middle East have stopped making offers for June and July shipment, in the hope of capturing a higher netback in the current uptrend, traders and producers said.

Some Chinese traders said they were concerned that downstream demand could weaken as the soaring raw material prices could make plastics processors cut operating rates.

"It is difficult to obtain official data that can accurately reflect how the Chinese plastics processing sector is coping with the rising raw material costs, but many second-tier traders and small processors are expected to cut operating rates if they cannot absorb or pass on the higher raw material costs," a Beijing-based trader said in Mandarin.

China’s current tight supply of PP was also due to the drastic fall in its first quarter imports, Chinese traders.

China imported around 593,289 tonnes of homopolymer grade PP in the first quarter, 37% lower compared with the same period last year.

Major PP producers who export to China include BasellLyondell, Formosa Plastics, Honam Petrochemical and SamsungTotal.

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For more on PP visit ICIS chemical intelligence

By: Chow Bee Lin
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