China polyolefins demand predicted to improve from H2 2009

17 March 2009 11:09  [Source: ICIS news]

HONG KONG (ICIS news)--China’s polyolefins demand may improve from the second half of this year due to low interest rates and increased credit liquidity, a senior official of the Guangdong Plastics Exchange said on Tuesday.

“I think polyolefins demand and hence prices may hit the bottom and start rising again some time between the second half this year or the first quarter of next year,” the exchange’s vice president Cai Hong Bing said in Mandarin.

“We estimate that China’s polyethylene [PE] demand fell by 2% last year compared with the previous year, and polypropylene [PP] demand registered a zero growth rate during the same period,” he added on the sidelines of the International Polyolefin Conference, a two-day event in Hong Kong.

The growth rate of China’s money supply also indicates that commodity prices may bottom out in the second half and start increasing, Cai said.

“The growth rate of China’s money supply has been rising since hitting a low of 10% in January this year,” he said, referring to the amount of cash in circulation and all deposits, which is the broadest measure of money supply.

Commodity prices typically track changes in the money supply and there’s typically a time-lag of 6-12 months between the two, he said.

The Guangdong Plastics Exchange offers a range of petrochemical-related services, including an online trading platform for polyolefins and polyvinyl chloride (PVC).

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By: Chow Bee Lin
+65 6780 4359

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