13 June 2008 10:31 [Source: ICIS news]
SHANGHAI (ICIS news)--China polypropylene (PP) prices inched down yuan (CNY) 100-500/tonne ($14-72/tonne) this week after a CNY2,200-2,700/tonne hike last week on signs of improving supply, a source said on Friday.
Sellers were anxious to move cargoes to lock in profit but downstream converters were resistant to the high standing prices and adopted a watch-and-see stance, leading to a drop in prices to around CNY16,400-CNY17,300/tonne EXWH (ex-warehouse) east China, the source added.
Tightness in supply would gradually be relieved as Sinopec adjusted its production plan to cut less output because production losses resulting from Maoming cracker outage had already offset the need for reduced production.
Another positive factor on the supply side was the restart of Maoming Petrochemicals's 170,000 tonne/year PP unit last weekend and the producer was expected to restart another 300,000 tonne/year PP unit at the weekend.
Increased offers from Sinopec and PetroChina this week did not deter the price decrease, the source added, leaving traders worried about further decreases after hitting record high levels.
“PP prices had risen CNY5,000/tonne from March to June,” said one. “The room for downside has become very large.”
Crude oil's rise of about $30/bbl from March to June would equate to a PP increase of CNY1,500/tonne. The remaining CNY3,500/tonne PP price increase during the period was mainly a result of tight propylene and PP supply as well as speculation, said traders.
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