FocusChina petchems trade to slow during long holidays to mid-Oct

14 September 2010 07:24  [Source: ICIS news]

By Judith Wang

SINGAPORE (ICIS)--Trading of petrochemicals in China may slow down from next week until the middle of October, as most market players will take a long holiday break, analysts and industry sources said on Tuesday.

China would observe its annual Mid-Autumn Festival on 22-24 September and celebrate its week-long National Day holiday on 1-7 October.

“Most traders and producers will go home for holiday celebrations and retreat from the markets from next week. The markets will become quiet,” said Du Zhiqiang, a Shanghai-based analyst from Ping An Securities.

Petrochemical plants that would continue to run for the duration of the holidays would have to secure feedstocks this week, he said.

“Traders will buy some cargoes if prices are low and sell cargoes if prices are high at the moment,” Du said.

Buying sentiment this week got a boost from firming crude values and positive economic data out of China, said a trader.

But actual trades would turn sluggish late next week, with normal activities only expected to resume in the middle of next month, when most market players return from the long holidays, industry sources said.

“More purchasing activities will happen after [the] holidays, so prices will likely start rising [then],” the trader said.

The recent strong appreciation of the yuan should be beneficial in helping China secure imported petrochemical at a cheaper price, analysts said.

The country is the biggest importer of petrochemicals in Asia.

“Given that China imported more upstream products, such as crude, gas and fuels and chemical feedstock like polyethylene and polyproplyene, so China will spend less in buying them in the future. It’s a good thing,” said Lu Zhen, an analyst from Shanghai-based fund manager Galaxy Asset Management Co.

But the country’s exports may take a hit if the yuan continued to strengthen, which maybe the case in the months ahead, analysts said.

On Tuesday, the Chinese yuan strengthened to 6.7378 against the dollar – its highest level achieved since the peg against US currency was suspended in July 2005

“It indeed will hurt exports,” said Lu of Galaxy Asset Management..

With additional reporting by Dolly Wu

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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By: Judith Wang
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