FocusChina petchem imports slump in holiday-shortened February

31 March 2010 07:40  [Source: ICIS news]

By Judith Wang and Dolly Wu

SHANGHAI (ICIS news)--China’s petrochemical imports significantly declined in February due to sluggish demand in the weeks leading to the Lunar New Year holidays, with volume intake likely to improve this month, industry sources and analysts said on Wednesday.

Working days last month were shortened by the week-long celebration in China from 13-21 February, they said.

“Imports in March will rise from February with the increasing [domestic] demand, but whether the volume will exceed the level in March 2009 was still unknown,” said Wang Hua an analyst at Dalian-based brokerage firm Bohai Futures Co.

Wang added that some downstream plants were expected to hike operating rates gradually, which would translate to higher demand for imported petrochemical raw materials.

China took in 22% less linear low density polyethylene (LLDPE) in February to 177,697 tonnes compared to the same period last year and down 21% from January levels, based on latest data from China Customs.

Its polvinyl chloride (PVC) imports, meanwhile, plummeted 55% year on year to 99,230 tonnes last month, down 19% from January, according to official statistics.

Inactive trading also saw imports of purified terephthalic acid (PTA) into China falling 10% year on year to 371,975 tonnes, while the total volumes of monoethylene glycol (MEG) that entered the country declined 8% to 461,117 tonnes, data from China Customs showed.

PTA imports, meanwhile, were significantly affected by China's imposition of a provisional anti-dumping duty (ADD) on material coming from South Korea and Thailand.

“The key reason for the February imports fall was the seasonal holiday impact. Imports next month will improve,” said an analyst at Beijing-based Founder Securities.

Last month, most polyethylene (PE) and polypropylene (PP) importers did not want to keep stocks over the week-long Chinese New Year holidays, industry sources said.

Buying interest for February cargoes was also dampened by China’s credit tightening measures that were introduced in mid January, they added.

Importers were concerned that domestic consumption in China as authorities try to curb the growth in new loans, industry sources said.

The high comparative figures in 2009 were also cited as the principal reason for the annual sharp falls in February import numbers, analysts said.

“In early last year, China’s economy was recovering faster than other economies, thanks to the country’s massive stimulus package,” said Wang of Bohai Futures.

China posted an 8.7% GDP growth last year, beating its own target of an 8.0% expansion, largely due to heavy economic pump-priming by the government, while most major economies were in recession.

At that time, Wang said that downstream users in China had imported more cargoes and built stocks in 2009 on the back of lower product prices along with low crude values.

Source: China Customs

With additional reporting by Chow Bee Lin and Becky Zhang

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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By: Judith Wang
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