20 July 2009 07:56 [Source: ICIS news]
By Chow Bee Lin
SINGAPORE (ICIS news)--China’s polyethylene (PE) and polypropylene (PP) import prices have remained firm on the back of strong domestic demand and relatively low inventories, but volatile crude values continue to cap prices, industry sources said on Monday.
“Many Chinese traders and end-users are holding low inventories as they had expected prices to fall in July and August,” an Asian PP producer said.
Traders and end-users had earlier expected prices to fall because they had thought Fujian Refining and Petrochemical’s (FREP) new plants in southern ?xml:namespace>
Many Asian PE and PP importers resisted sellers’ attempts to raise resin prices in the belief that prices should be reduced to match lower crude values. Crude prices had fallen by more than $10/bbl in the past month due to various factors, including the gloomy outlook on the global economy and tumbling equities markets.
The benchmark film grade high density PE (HDPE) and injection and yarn grade PP were assessed stable at $1,220-1,280/tonne (€866-909/tonne) and $1,100-1,160/tonne respectively, on a CFR (cost and freight)
"There’re not much inventories of different grades of imported PE and PP, particularly the linear low density PE (LLDPE) grade used in greenhouse film production," a Beijng-based trader said. The peak greenhouse film production season lasts from July to end September, he said.
"The supply of general purpose block copolymer PP is rather tight [as well] because many Asian producers had switched to pipe grade copolymers," a Zhejiang-based trader said.
"Storage space in bonded warehouses at the main ports, including Waigaoqiao,
"The non-bonded warehouses are quite full but cargoes are moving in and out of these warehouses very quickly," said a source at a second logistics company.
China’s plastic end-product output in January-May this year rose to yuan (CNY) 382 trillion ($56 trillon) and the production-sales ratio of its plastic end-products for the same period was around 97%, which were 7.46% higher and 1.46% lower compared with the same period last year, according to the Ministry of Industry and Information Technology (MIIT). Plastic end-product exports for the same period fell by 12.13% to CNY64 trillion, the MIIT said.
Government stimulus funds for the local infrastructure sector had spurred plastics consumption in the country, an official of the China Plastics Processing Industry Association (CPPIA) said. “Construction material accounted for over 60% of the local plastics consumption in the first five months this year,” the CPPIA official said.
The toy industry, another key application sector, registered a 7.78% growth in output with around CNY40 trillion worth of production, according to the MIIT.
The recently implemented home appliance subsidy scheme boosted plastics consumption in the washing machine and refrigerator application sectors, local appliance makers said.
However, it was still unclear how much of the home appliances produced in the first half of this year would be absorbed by domestic consumers, a local home appliance maker said.
“Home appliance production was raised according to demand estimated based on the assumption that the government subsidy would spur spending, but we’re not sure if the actual consumption would happen in reality,” the home appliance maker added.
The Chinese government had mobilised around 10,000 students from seven local universities in a major exercise to raise awareness among rural communities on the home appliance subsidy schemes, and to find out how the consumers were responding to the schemes, according to the MIIT.
The exercise would be carried out from June to September and was expected to give a clearer picture of the impact of the subsidy schemes on consumer spending on home appliances, the MIIT said.
($1 = CNY6.83/ $1 = €0.71)
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