30 December 2010 08:22 [Source: ICIS news]
By Chow Bee Lin
Chinese traders and end-users may refrain from buying for a month from mid-January because of the Lunar New Year holidays, market sources said.
The Chinese markets would be closed on 2-8 February for the Lunar New Year celebrations. After which, restocking of polyolefins would begin, possibly pushing prices higher.
Meanwhile, high production costs due to recent spikes in crude values may also prompt PE and PP producers to nudge up prices, traders said.
Light sweet crude for February was at above $91/bbl (€69/tonne) at noon on Thursday.
There was a widespread belief that high production costs would dominate the price discussions for plastics next year, traders said.
These producers were likely to reduce export volumes in the run-up to the plant shutdown, they added.
However, some Chinese importers were not so worried about a supply crunch, as they were expecting high volumes from new PP plants that were recently started up in
Around 1.55m tonnes and 1m tonnes of new PP capacity were started up in the Middle East and
Supply of film grade low-density PE (LDPE) was expected to remain tight in Asia next year as many regional producers had switched to more lucrative products such as coating-grade LDPE or ethylene vinyl acetate (EVA), regional buyers and sellers said.
There were concerns that a lack of capacity addition in China and the Middle East in the first three quarters of next year could also mean tighter supply of linear low-density PE (LLDPE), while demand was expected to grow at a steady pace next year, they said.
Supply of different high-density PE (HDPE) grades such as film, injection and blow moulding were expected to be in abundance because of ample domestic production, Chinese traders said.
($1 = €0.76)
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