China PE, PP trade slows after sharp price increases

11 July 2011 11:32  [Source: ICIS news]

SINGAPORE (ICIS)--China’s polyethylene (PE) and polypropylene (PP) trade has slowed down following sharp increases in their import prices last week, local traders said on Monday.

“Many local traders replenished their stocks last week when prices were rising. They are taking a wait-and-see stance now,” a trader in northern China said in Mandarin.

The average weekly prices of the benchmark linear low density PE (LLDPE) rose by $70/tonne (€49/tonne) or 5.7% in the week ended 8 July to $1,295/tonne CFR (cost & freight), according to ICIS.

The average weekly prices of the benchmark PP yarn grade rose by $35/tonne or 2.4% in the same week to $1,490/tonne CFR after a seven-week decline, ICIS data shows.

A slowdown in trading activity may limit the PE and PP price increases as last week’s restocking activity and the resultant price increases were mostly driven by local traders, local and foreign suppliers said.

“Prices are likely to be flat this week because traders appear to have bought enough [material] and plastics converters are not ready to restock yet,” a source at a global PE producer said in Mandarin.

Many plastics converters are expected to restock at the end of July to prepare for the peak production season in August, local traders said.

China's plastics manufacturing sector enters a traditional peak production season in August in the run-up to the year-end consumption.

A slowdown in trading activity this week is unlikely to cause PE and PP prices to fall because most local and foreign suppliers do not have high inventories and thus have no urgency to offload their cargoes, local traders said.

($1 = €0.70)

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By: Chow Bee Lin
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