26 September 2008 06:45 [Source: ICIS news]
By Chow Bee Lin
SINGAPORE (ICIS news)--The China polyolefins market has seen the steepest week-on-week price fall in a decade, as some Asian and Middle East producers, succumbing to mounting inventory pressure, slashed prices by more than $150/tonne, traders and producers said on Friday.Key benchmark injection and yarn grade polypropylene (PP) was sold at $1,300-1,350/tonne CFR (cost and freight) China for October shipment, down by as much as $150/tonne from last week’s discussion levels, they added.
Film grade high density polyethylene (HDPE) transactions were reported at $1,380/tonne CFR China for October shipment, sliding as much as $120/tonne from last week, they said.
The dramatic price slide took many converters and traders by surprise as most Asian and Middle East producers had until recently been refraining from embarking on a price war, a Chinese trader said.
As a result of the sharp drop in import prices into China, imports are now more competitive than local product, a southeast (SE) Asian polyolefins producer said.
"The price of imported PP yarn, for instance, is estimated at yuan (CNY) 11,350/tonne ($1,664/tonne) ex-warehouse (EXWH), based on the import cost of $1,300/tonne CFR China," the producer added. This was cheaper than locally produced PP yarn, which was around CNY 11,700/tonne EXWH in east China.
The steep fall could have made imported resins more affordable to end-users in China but transaction volumes had not picked up significantly, a trader in east China said in Mandarin.
"Many end-users are still gripped with fear that resin prices could fall further and hence are buying only if they have to fulfil downstream orders," he added.
"Even end-users with secured downstream orders are frustrated with the market uncertainty, as their customers often demand for retrospective discounts when raw material prices fall," he said.
($1 = CNY6.82)
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