12 July 2011 11:20 [Source: ICIS news]
Offers of powdered PP were at CNY12,000/tonne EXW (ex-works) at Shandong, a major powdered PP production hub in eastern China, but buying ideas were mostly at CNY11,800-11,850/tonne EXW, local powdered PP producers said.
Buyers in the key downstream PP woven bag application sector are unwilling to accept higher resin prices, citing tightened credit lines and volatile crude futures as bearish factors, a major powdered PP producer in eastern
However, many domestic producers said they are not ready to reduce their price offers for powdered PP because the recent hikes in the cost of propylene feedstock have cut into their margins.
Local refineries are selling propylene at CNY11,400-11,500/tonne ex-tank at
Powdered PP typically has to command a CNY800/tonne premium over propylene feedstock in order for its production to be justified, local powdered PP makers said.
The current CNY500-600/tonne spread between powdered PP and propylene feedstock is thus not enough to cover the cash costs of powdered PP makers, the producers said.
Domestic propylene prices are expected to remain at their current levels or rise further in the coming weeks because of tight supply, local refiners said.
“The spot availability of locally produced propylene is expected to be tight going forward, as many local refineries are running at low rates because of the weak gasoline and diesel oil markets,” a refiner said in Mandarin.
The average operation rate of
Powdered PP makers have also found it unfeasible to turn to imported propylene cargoes to cover the shortfall in propylene supply as they are unable to afford the current import prices, said a major powdered PP maker in eastern
The buying ideas of most propylene end-users and importers remained at below $1,450/tonne CFR (cost & freight) NE Asia on Monday, while selling ideas were at the high $1,400s/tonne CFR NE Asia at least, according to ICIS.
($1 = CNY6.47)
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