07 January 2010 05:57 [Source: ICIS news]
By Chow Bee Lin
SINGAPORE (ICIS news)--Buying activities in the polyethylene (PE) and polypropylene (PP) markets in China will likely slow down in end January, ahead of the week-long Lunar New Year holidays next month, and pull the plug on the recent price rally of the polymer products, industry sources said on Thursday.
Because a number of Chinese importers had booked cargoes in the past two weeks, trades would probably wind down when price discussions for February shipments start, said a major trader.
Benchmark injection and yarn grade PP was sold at $1,200-1,240/tonne (€828-856/tonne) CFR (cost and freight) ?xml:namespace>
Benchmark film grade high density PE (HDPE) was sold at $1,270-1,310/tonne CFR China this week, $30-40/tonne higher from last week, they said.
In the China domestic market, imported PP injection and yarn and film grade HDPE grades were selling at yuan (CNY) 10,800-10,950/tonne ($1,582-1,603/tonne) and CNY11,100-11,400/tonne, respectively, on Tuesday on an ex-warehouse basis, CNY250-400/tonne higher from last Friday, according to China chemicals market intelligence service ICIS Chemease.
“Demand for February shipments is likely to be weak also because activities in the local plastics processing sector are expected to slow down from end-January/early-February, when workers start heading back to their hometowns for the Lunar New Year holidays,” the east China-based trader said.
The Lunar New Year in
High crude prices currently hovering above $80/bbl, as well as supply concerns due to scheduled maintenance shutdowns of plants, fuelled strong trades in the PE and PP markets in the past two weeks, said a source from Sinopec, a petrochemical giant in
Concerns about supply tightness emerged as Sinopec subsidiaries - Maoming Petrochemical and Hainan Petrochemical shut their polymer plants in mid-December for maintenance that would last around 40 days, the Sinopec source said.
Recent production problems at Qilu Petrochemical and Yangzi Petrochemical in north and east
Production issues at Yangzi and Qilu, meanwhile, had been resolved, he added.
The recent hikes in PE and PP prices were also attributed to the strong resolve of some regional suppliers to raise prices amid tight regional supply and high prices of feedstocks ethylene and propylene, industry sources said.
“Our PE and PP stocks are very low now as we’ve been producing at low rates since early December due to a lack of ethylene and propylene feedstock,” a South Korean producer said.
However, some industry sources said they believe the PP and PE uptrend would continue through to February if upstream feedstock prices rose further.
“There’s speculation in the market that if crude hits $85/bbl, naphtha and propylene will trade at $800/tonne and $1,300/tonne, (respectively), which in turn will push PP prices higher,” an Asian PP producer said.
($1 = €0.69 / $1 = CNY 6.83)
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